Centre proposes 12% surcharge on capital gains from share buybacks

New Delhi: The Lok Sabha on Wednesday passed the Finance Bill 2026, incorporating 32 government-proposed amendments, including the imposition of a flat 12% surcharge on capital gains earned by individual or corporate shareholders by selling shares in the buyback offer of companies effective from April 1.

Under the current framework, surcharge on capital gains is linked to income levels of individuals, with no surcharge up to Rs 50 lakh and 10% between Rs 50 lakh and Rs 1 crore.

Moving to flat 12% surcharge would result in higher tax burden on majority of shareholders. However, for large buybacks, where gains exceed Rs 1 crore, the new framework is beneficial. At present, gains from share buybacks exceeding Rs 1 crore are subject to 15% surcharge. The flat 12% surcharge, implies a 3 percentage point reduction for such taxpayers.

With the passage of the Finance Bill 2026, the Budgetary approval process has been completed in Lok Sabha. It will now move to Rajya Sabha.

Parliamentary Affairs Minister Kiren Rijiju informed that the Finance Bill 2026 will be taken up for consideration in the Rajya Sabha on Friday.