New Delhi: The income-tax department on Monday released draft rules for computation of the way income from buyback of shares in unlisted companies will be taxed. The draft rules seek to clarify the way this distributed income will be calculated. The draft rules seek to enumerate the various circumstances under which the shares may be bought back by a company—like demerger, amalgamation—and how the income will be calculated. Under section 115QA of the Income-tax Act, 1961 (the Act), an additional income-tax at the rate of 20% is levied on the distributed income arising out of buyback of unlisted shares by the company. It also seeks to clarify that the premium amount received by the company on issue of shares and on conversion of bonds or debentures, debenture-stocks or deposit certificates in any form will also be included in the calculations of the distributed income.

Source: Mint July 25, 2016 15:00 UTC