Budget 2026-27: FM Sitharaman Sets 22% Tax for Corporate Promoters, 30% for Non‑Corporate Buyback

The Union Budget for the Financial Year 2026-27 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha today (Sunday, 1 February 2026).

Among many announcements made during the Union Budget 2026 presentation, FM Nirmala Sitharaman introduced a targeted taxation framework for share buyers to eliminate tax arbitrage.

During her address, under the new regime, buyback proceeds will be taxed as capital gains for all shareholders, but promoters will face a specific additional tax.

Under the new policy, Promoters now face fixed tax rates 22% for corporate promoters and 30% non-corporate promoters. This move is intended to benefit minority shareholders by taxing their proceeds as capital gain while disincentivising the use of buyers as a tool for tax avoidance by company promoters.

"Change in taxation of buyback was brought in to address the improper use of buyback route by promoters. In the interest of minority shareholders, I propose to tax buyback for all types of shareholders as Capital Gains. However, to disincentivize misuse of tax arbitrage, promoters will pay an additional buyback tax. This will make effective tax 22 percent for corporate promoters. For noncorporate promoters the effective tax will be 30 percent," Sitharaman said

📊 Reading Budget stories? Keep the complete reference handy | Click Here

Capital gain is something that the profit you make when you sell an asset ( like property, shares, and gold) for more than what you originally paid for it. Buyback proceeds will be taxed as capital gains, which means the money you get from selling shares back to the company will be treated like profit from selling shares and taxed accordingly.

The government ensures fairer taxation and greater protection for minority investors.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates