ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 19 April. Click Here for more information.
ForumIAS Answer Writing Focus Group (AWFG) for Mains 2024 commencing from 24th June 2024. The Entrance Test for the program will be held on 28th April 2024 at 9 AM. To know more about the program visit: https://forumias.com/blog/awfg2024
- The Finance Ministry has said that it will look into the applicability of 20% tax proposed in the 2019-20 Budget on the current share buybacks by listed companies.
- This tax was proposed in the budget to discourage the practice of avoiding Dividend Distribution Tax(DDT) through buybacks by listed companies.
- Dividend Distribution Tax(DDT) is paid by companies who distribute their profits to their shareholders in the form of dividends.
- Buyback of shares refers to the corporate action where a company repurchases its own shares from the existing shareholders.
- During the buyback of shares,the price of shares is usually higher than the market price.Typically,companies that have excess cash with no specific investment or other deployment requirements consider buybacks.
- Further,buying back shares is also a route to make a business look more attractive to investors.By reducing the number of outstanding shares,a company’s earnings per share ratio is automatically increased.
