India
With the effect from October 2024 there will be significant changes in the tax regime for buy back of shares.
The new rule will shift the tax burden from companies to shareholders. Current tax rate of 20% paid by the company will be eliminated.
Moving forward, the proceeds from buy back will treated in the same fashion as of dividend and will be taxed in their individual’s respective slab rates.
The resident shareholders will end in increased tax burden particularly in higher tax brackets.
Non-resident shareholders tend to benefit from the new tax regime under tax treaties for dividend income with option to claim credit for Indian taxes & their home jurisdiction.
Singapore
As per Singapore tax laws, buy back of shares are treated as capital expense in nature. The SG entity is liable to pay stamp duty of 0.2% on value of shares or purchase price at the time of buy back of shares.
In the hands of the shareholder, proceeds received from buyback would be considered as capital gain.
Any gain or loss from sale of share are generally viewed as personal investments and stands exempted in the hands of the shareholder.
