Entertainment National Sports Markets Business & Economy Lifestyle World Astrology & Religion Technology Education & Jobs Auto Politics Viral Opinions

Tax Harvesting: Save Capital Gains Tax Before March 31 Deadline

Tax Saving

N

News18•26-03-2026, 15:19

Tax Harvesting: Save Capital Gains Tax Before March 31 Deadline

•Tax harvesting is a legal strategy to reduce capital gains tax liability by selling investments at a loss to offset gains.
•It involves booking losses before the financial year ends to lower overall taxable capital gains.
•Short-term capital gains (STCG) are taxed at 15%, while long-term capital gains (LTCG) above Rs 1 lakh are taxed at 10% without indexation.
•Realized losses can be carried forward for up to eight assessment years if reported in the income tax return.
•Investors can utilize the tax-free limit on long-term capital gains (initial Rs 1.25 lakh) through tax harvesting before March 31.

Read Full Article on News18 in English

✦

More like this

Capital Gains Tax Savings: Understanding Tax Harvesting Before March 31

Stories

Similar Stories

income tax

Tax Harvesting: Save Capital Gains Tax Before March 31!

Tax Harvesting Explained

Tax Harvesting: Save Capital Gains Before March 31 Deadline

Capital Gains New Rules 2026: క్యాపిటల్ గెయిన్స్ ట్యాక్స్ కొత్త రూల్స్... మీ సందేహాలకు సమాధానాలు ఇవే (ప్రతీకాత్మక చిత్రం)

Capital Gains Tax 2026: New Rules Explained for Investors

From April 1, the rules around share buybacks have changed, altering how investors and promoters are taxed on such transactions. The government has shifted away from the earlier system—where companies paid the tax and shareholders received proceeds largely tax-free—to a new structure where investors will now be taxed directly. Buyback gains will be treated like capital gains, similar to selling shares in the market. The move is aimed at closing tax loopholes and bringing buybacks closer in line with dividends.What is a share buyback?A share buyback is a corporate action where a company repurchases its own shares from existing shareholders, usually at a premium to the market price. Buybacks are often used as a way to return surplus cash to shareholders, improve earnings per share, and signal management’s confidence in the business. Until now, buybacks also offered a tax-efficient route for promoters and large shareholders compared to dividends.What was the earlier tax regime?Under the existing framework, companies paid a buyback tax (around 20 per cent plus surcharge and cess) on the distributed income. Shareholders, including promoters, received buyback proceeds largely tax-free. This made buybacks far more attractive than dividends, especially for promoters, and led to what the government termed “improper use of the buyback route".What changes from April 1?From April 1, buyback proceeds will be treated as capital gains in the hands of shareholders, similar to selling shares in the market. This means individual investors will pay tax based on the holding period of the shares. Short-term capital gains will be taxed at 20 per cent, while long-term capital gains will attract a 12.5 per cent tax.At the same time, to discourage tax arbitrage, promoters will face an additional buyback tax. The effective tax rate on buybacks for corporate promoters will rise to 22 per cent, while non-corporate promoters will face a higher rate of 30 per cent.What does it mean for retail investors?For individual shareholders, especially non-promoters, the change is largely positive. Earlier, investors in the highest income tax slab effectively bore a 30 per cent tax burden on dividends, while buybacks were tax-free. Now, buybacks will be taxed at capital gains rates, which are lower for most investors.Market participants point out that this reduces the tax outgo for retail investors and brings parity between different modes of shareholder returns.What does it mean for promoters and companies?The higher tax burden on promoters reduces the attractiveness of buybacks as a tool for returning cash. Experts believe this could push companies to rethink their capital allocation strategies. Roop Bhootra, Whole-time Director at Anand Rathi Share and Stock Brokers, said the move is positive for individual shareholders but negative for corporates, as it discourages buybacks and may encourage companies to deploy surplus cash towards capital expenditure or research and development instead.Dividend versus buyback: will the balance change?With the tax advantage of buybacks narrowing, companies may increasingly favour dividends to distribute profits. This could lead to more predictable cash flows for investors but may also reduce the flexibility companies enjoyed through buybacks. Tax experts also note that the revamped buyback tax framework, combined with a higher securities transaction tax on futures and options, could influence short-term market sentiment and investor behaviour.

Share Buyback Rules Change From April 1: What It Means for Investors And Promoters

Tax-loss harvesting involves selling loss-making investments to offset gains realised elsewhere in the portfolio.

March 30: Last Chance for FY26 Tax Savings via Tax-Loss Harvesting

Capital Gains Tax के बारे में जानिए सबकुछ

New Capital Gains Tax Rules 2026: Shares to Property, Know the Impact