Are non-residents taxed on the repurchase of the Indian company share? | Mint

I live in Dubai. I bought 5,000 shares in an Indian company three years ago with a valuation of £ 200 a share. As the promoters want to facilitate the investors, the company is now planning to buy shares at £ 500 per unit in May 2025. Will I be liable to pay any repurchase tax in India, or will the company dismiss the tax liability on my behalf? -Names are withheld upon request before amendments made by the Finance Act (No. 2), 2024, a domestic company was liable to pay an extra income tax at 20% (plus applicable surcharge and strike) on the amount of the distributed income (namely the repurchase price less expense price of shares). As a result, this amount is exempt from tax in the hands of the shareholders (both residents and non-resident). Also read: New tax rules for repurchase of shares to kick in. Say hello or goodbye? With effect from 1 October 2024, an Indian company is no longer liable to pay taxes on the amount distributed by the repurchase of shares. The tax treatment has changed completely based on the changes made to the Finance Act (No. 2), 2024, according to the amendments made to the provisions of the Income Tax Act, 1961, the entire amount that an Indian company paid on the repurchase of its shares would now be treated as a dividend in the hands of its shareholders. Such a dividend will be charged to tax against the various plate rates of the shareholders. Also read: Why raising the repurchase of shares announced in the budget further harms investors, no deduction from any purchase costs or other expenses will be allowed against these dividend income. Instead, the expansion of rights would produce a capital loss that is equivalent to the acquisition costs of the shares, with the consideration of the sale considered zero. It can be noted that the indexing benefit has also been removed under the Act. The resulting capital loss can be imposed on other capital gain earned in the same financial year either in the following eight financial years. In your situation, the revenue would be £ 25 lakh, while the long -term capital loss amounted to £ 10 Lakh. This loss can only be set off against other long -term capital gain. For non -residents, both TDS and final taxes under the ITA are levied on a 20% rate (plus appropriate surcharge and CESS) under the ITA on dividends. Since the revenue arising from the repurchase is taxed in the same way as a dividend under the ITA as an actual distribution of dividends, you can use the benefits of Article 10 of the India-Uae Dubble Tax Avoidance Agreement (DTAA), which allows for a reduced tax rate of 10% on the dividend income. It will be subject to compliance with documentation requirements such as providing TRC and Form 10F. Also read: Decoding of dual taxes: What NIS needs to know for better tax efficiency Harshal Bhuta, is a partner at PR Bhuta & Co., Chartered Accountants. First published: 14 Apr 2025, 06:27 pm Ist