Startup & Business
Buyback of Shares — Meaning
A company repurchasing its own shares — taxed as dividend in shareholders' hands since October 2024.
What is Buyback of Shares?
Under Section 68 of the Companies Act, a company can buy back up to 25% of its paid-up capital and free reserves, subject to approvals and a post-buyback debt-equity ratio of 2:1. Since 1 October 2024, the entire buyback amount is taxed as dividend in the shareholder's hands at slab rates, and the cost of the shares bought back is treated as a capital loss that can be set off against capital gains.
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Related terms
More Startup & Business terms
MCA (Ministry of Corporate Affairs)
India's government ministry administering the Companies Act and registering companies through the MCA portal.
ROC (Registrar of Companies)
Government authority under MCA that registers companies and LLPs and maintains statutory records.
DIN (Director Identification Number)
Unique 8-digit number assigned to every director of a company in India.
DSC (Digital Signature Certificate)
Electronic signature issued by certifying authorities — required for filing company/LLP documents with MCA.
Private Limited Company
A separate legal entity incorporated under the Companies Act 2013 — most common startup structure.
