What is Buying back shares?
1 Buying back shares is a process to repurchase them from shareholders. It can be done through the stock exchange at market price, or directly at a fixed price
2 The period for which the offer remains open, the price, if applicable, and the number of shares that have to be bought have to be announced in advance
3 In case of a buy-back through the exchange, the shareholder has to sell the shares and complete the delivery like any other transaction. He receives payment through the broker
4 In a fixed offer, the shares are tendered by giving their details, the DP's name and identity, and demat account details on a prescribed form or plain paper. The shares are shifted to the firm in an off-market transaction
5 The shares procured by the company are not available for trading. The company sends the consideration for the shares accepted within 21 days of the closure
6 If buyback is via the exchange, STT will apply and long-term gains are tax-exempt. Short-term gains are taxed at 15%. In case of a direct offer, no STT is paid and capital gains are taxed
Source: Economic Times
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