Business

Proposed share buyback framework aims to benefit small shareholders, not promoters

Published

3 days ago

1 February 2026

Proposed share buyback framework aims to benefit small shareholders, not promoters

To protect minority shareholders and curb tax arbitrage by promoters, Finance Minister Nirmala Sitharaman on Sunday announced a major overhaul of the taxation framework governing share buybacks.

Presenting the Union Budget 2026-27, Sitharaman said that buybacks will be taxed as capital gains for all categories of shareholders.

“In the interest of minority shareholders, I propose to tax buyback for all types of shareholders as Capital Gains,” she said.

To discourage misuse of tax arbitrage, promoters will be subject to an additional buyback tax, raising the effective tax rate to 22 per cent for corporate promoters and 30 per cent for non-corporate promoters, she stated.

Sitharaman said, “Change in taxation of buyback was brought in to address the improper use of buyback route by promoters”.

The Income Tax Department on X said, “The buyback taxation has been simplified with benefits to small shareholders”.
Under the proposal, shareholders other than promoters will pay tax on such gains at the applicable capital gains tax rate. That is 12.5 per cent for long term capital gains, listed and unlisted and 20 per cent on short term listed, and applicable rate on short term unlisted. However, to prevent promoters from misusing the buyback, they have to pay additional income tax. Where a domestic company is a promoter, they will pay effective tax of 22 per cent on gains on buyback and where promoter is other than a domestic company, they will pay effective tax of 30 per cent on gains on buyback.

“For promoters, the tax liability will largely remain similar if it is taxed as dividend in their hands,” the Income-Tax department stated on X.

Market experts believe that the proposal to tax buyback proceeds as capital gains for all shareholders, ensures that tax applies only to the real gain. Further, the higher tax burden on promoters may lead companies to reassess their capital allocation strategies between dividends and buybacks.

This move aligns buybacks with normal share sales for minority and retail interests while safeguarding revenue, the expert said.

Roop Bhootra, Whole-time Director, Anand Rathi Share and Stock Brokers, said the proposed move is a positive for individual shareholders as tax liability reduces from 30 per cent (highest slab rate) to capital gains rates (short term 20 per cent and long-term 12.5 per cent) and negative for corporates and discourages buyback and pushes corporates to use reserves for capital expenditure and/or R&D.

Addressing a post-budget conference, Revenue Secretary Arvind Shrivastava also said that it was a “relief” for shareholders.

“It’s not a tax, additional tax, it is a relief. The buyback tax system was changed to make it a dividend income, which is income at the applicable income tax rate at the hand of the shareholder.”

“The whole objective of doing that change at that time was a misuse of a tax arbitrage by promoters. So the change made for promoters is that an additional buyback tax on them, which again keeps things status quo for them. So even today, the marginal rate at which they would have been charged,” he added.

Earlier, share buybacks were taxed mainly at the company level, with shareholders facing uneven or unclear outcomes. After the 2024 change, buyback proceeds are taxed in the hands of shareholders, often at applicable slab rates, on the entire receipt without allowing deduction for the cost of acquisition, market experts said.

“The amendment in buyback taxation to treat it as capital gains as earlier is positive for retail and non-promoter shareholders. Even for promoter shareholders, it enables offsetting the cost against the buyback proceeds and the additional income tax is payable on the capital gains,” Vaibhav Gupta, Partner, Dhruva Advisors, said.

Parizad Sirwalla, Partner and Head, Global Mobility Services- Tax, KPMG in India, said that revamp of buyback tax framework will influence investor behaviour and short-term sentiments.

In market parlance, buyback tax is a kind of tax levied on companies that buyback their own shares from shareholders. Generally, governments impose this tax to restrain firms from distributing profits to shareholders through share buybacks rather than paying dividends. PTI

Business

PAMT CORP: Pain Is Likely To Continue Near-Term (Downgrade)

Published

7 minutes ago

4 February 2026

NewsAdmin

PAMT CORP: Pain Is Likely To Continue Near-Term (Downgrade)

Business

From Pixar to Disney+: The $100-billion blueprint behind Bob Iger’s Disney

Published

15 minutes ago

4 February 2026

NewsAdmin

From Pixar to Disney+: The $100-billion blueprint behind Bob Iger’s Disney

When Bob Iger was promoted to chief executive officer of Walt Disney Co in 2005, he took over a company that was an undeniable force in entertainment and theme parks, but badly in need of rejuvenation.

In one of his first moves, Iger made Disney shows like Lost and Desperate Housewives available for sale on Apple ‘s iTunes platform, ushering in the unique idea of watching TV online. Three months later he bought Pixar from Apple co-founder Steve Jobs. That $7.4 billion deal was an eye-popper, paving the way for blockbusters like Cars and Inside Out that reinvigorated Disney’s animated film business.

Those early moves hinted at key parts of Iger’s strategy: acquire marquee entertainment franchises and find new ways to exploit them. As he prepares to hand the reins next month to his successor, theme-parks chief Josh D’Amaro, Iger leaves a legacy that includes snapping up the biggest brand names in Hollywood via more than $100 billion in mergers and acquisitions, expanding in China and building a streaming business that delivered $24.6 billion in revenue from people watching movies and TV shows online last year.

“That’s one huge insight of his,” said David Collis, an executive education fellow at Harvard Business School who has written about Iger. “If you own these incredible entertainment franchises, any device only increases demand for your content.”

More deals followed Pixar, including Marvel Entertainment and its stable of superheroes, Star Wars-parent Lucasfilm and the $71 billion acquisition of 21st Century Fox in 2019, which brought in franchises like The Simpsons and Avatar.

“The deal we did for Fox, in many ways, was ahead of its time,” Iger said this week on an earnings call when asked about Netflix’s pending acquisition of Warner Bros Discovery.
Those acquired characters and stories found their way into Disney’s theme parks. In 2013, when the company first began exploring a Star Wars land for the parks, Iger told his designers, “Be the most ambitious that you have ever been,” Bob Weis, the longtime head of Disney’s parks design business, recalled in his 2024 autobiography.Iger was also keen on international expansion, green-lighting the $5.4 billion Shanghai Disneyland. Before its 2016 opening, Iger flew to China on a nearly monthly basis to monitor its progress, according to Weis.

The same year the Fox acquisition closed, Iger launched Disney+, the company’s flagship streaming service, the company’s response to the growing dominance of Netflix in online viewing. Providing a new outlet for programming that ran on networks like the Disney Channel was a threat to the company’s lucrative cable-TV business, but in the end, Iger relented.

Disney+ was a hit from the start. Ten million customers signed up the first day, driven by programming such as the Star Wars-spinoff The Mandalorian. The company reported 132 million Disney+ subscribers at the end of its latest fiscal year.

TV Star
Iger has spent his whole career in the TV business, rising up the ranks at ABC and performing every task, from getting a bottle of Listerine for Frank Sinatra before a TV special to scheduling the 1988 Winter Olympics. He was considered a likely CEO of broadcaster Capital Cities/ABC until that company was acquired by Disney in 1996 and he had to start clawing his way up the corporate ladder again.

When a shareholder revolt finally prompted the retirement of Disney CEO Michael Eisner in 2005, Iger got his shot.

More than 20 years later, the worst grade on Iger’s corporate report card likely comes in succession planning. Multiple extensions of his contract over the years led senior Disney executives to exit. When he finally stepped down for the first time in 2020, his handpicked successor Bob Chapek proved to be disappointment.

As Iger prepares to pass the baton to D’Amaro on March 18, he leaves plenty of work still to be done. On the recent earnings call, Iger said he hoped his replacement would carry on with his focus on reinvention.