Finance Bill 2026: 12% Surcharge on Buybacks Applies Only to Additional Tax on Promoters'; Income Tax Dept. Clarifies
The Income Tax Department has clarified that the proposed 12% surcharge in the Finance Bill, 2026 will apply only to the additional income-tax payable by promoters on capital gains arising from buybacks, and not on the entire gains.
In a clarification issued on March 26, 2026, the Department explained that the amendment relates to taxation of capital gains earned by promoters when companies buy back their own shares under section 68 of the Companies Act, 2013, which governs share buybacks.
The surcharge has been fixed at 12%, but the Department clarified that it is limited in scope. It pointed to section 69 of the Income-tax Act, 2025, which lays down how such gains are taxed, and clarified that the surcharge operates only on the additional income-tax computed under this provision.
“Therefore, the rate of 12% will apply only on additional income-tax to be paid by the promoters on aforesaid capital gains mentioned in section 69(2)(b),” the Department stated in the post on X (formerly Twitter).
This means the surcharge is confined to the additional tax component payable by promoters on such gains.
For non-promoters, the department said the existing surcharge rules will continue to apply, wherever relevant.