New Delhi, Feb. 1 -- During today's Union Budget 2026-27, Finance Minister Nirmala Sitharaman announced that the government will tax buyback proceeds for all types of shareholders as capital gains, marking a major overhaul of the previous rule. She added, however, that promoters will pay an additional buyback tax.

Under the previous rule, effective from 1 October 2024, all amounts received by shareholders from a buyback were treated as a "deemed dividend" and taxed at the individual's applicable slab rate, instead of being taxed as capital gains.

"In a big relief to minority shareholders, now buyback of shares will again be taxed as capital gains tax and hence long term shares tendered in buyback will be taxed only at 12.5% as against t...