Section 46A of The Income Tax Act 1961
Explanation.—For the purposes of this section, “specified securities” shall have the meaning assigned to it in Explanation to section 77A of the Companies Act, 1956 (1 of 1956).]
Summary
Explanation., For the purposes of this section, “specified securities” shall have the meaning assigned to it in Explanation to section 77A of the Companies Act, 1956 (1 of 1956).].
Practical examples
FAQ
1. How are buy-backs of shares taxed for shareholders under Section 46A of the Income Tax Act 1961?
Under Section 46A of the Income Tax Act 1961, when a company purchases its own shares, the difference between the cost of acquisition and the value received by the shareholder is deemed a capital gain for that shareholder.
2. In which year is the capital gain from a share buy-back taxed under Section 46A of the Tax Law?
Section 46A of the Tax Law states the gain is taxable in the year in which the shares or other specified securities were purchased by the company.
3. What does specified securities mean in the context of Section 46A of the 1961 Act?
As per the Explanation in Section 46A of the 1961 Act, specified securities has the meaning assigned to it in Section 77A of the Companies Act 1956.
Test yourself
Q1.Under Section 46A of the Income Tax Act 1961, who is responsible for paying capital gains tax on a share buy-back?
Q2.What calculation determines the capital gain under Section 46A of the Income Tax Act 1961?
Q3.Under Section 46A of the Income Tax Act 1961, specified securities are defined by reference to which other law?
Q4.If a company buys back its own shares in December 2024, in which year is the shareholder's gain taxed under Section 46A of the Income Tax Act 1961?