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S.No.
Situation
Determination of
Amount Received
1.
On Subscription
2.
3.
4.
5.
6.
7.
On succession or conversion
8.
NIL
10.
11.
12.
KEY CONCERNS
Expenditure incurred by the Company buying back,
should be allowed to claim deduction of the
expenses while computing distributed income.
The said rules do not take into consideration the
purchase of Shares in Tranches and Partial Buy
Back and transfer of shares by original shareholder
to another shareholder.
It is still unclear as to whether the residuary
category would also cover situations such as issue
of Buy-back of shares issued in kind and share
swap.
TAKE AWAYS
The formation of rules is a welcome step which do
provide the much-needed clarity with regard to the
manner of determination of consideration for the
Buy-back computation in certain given situation.
The rules further envision the first-in first-out
method (FIFO) in respect of shares being bought
back in DEMAT form which cannot be distinctly
identified;
1
Distributed Income as amended vide Finance Act, 2016 is defined as, consideration paid by the Company on buy-back of shares as reduced
by the amount which was received by the Company for issue of such shares, determined in the manner as may be prescribed.
Income-Tax (28th Amendment), Rules, 2016; Notification No. 94/2016, [F No 370133/30/2016-TPL dated Oct 17,2016] effective from
June 1, 2016.