India this month imposed a levy on its companies’ share purchases. The proximate motive was to close a loophole after introducing a dividend tax two years back — to ensure that companies pay something no matter how they return cash to shareholders. India’s practice of taxing markets started at least 15 years ago when it put a duty on most financial transactions, a measure that European politicians have also been looking at.
Offering shareholders an income stream, via dividends or buybacks, is part of the inherent obligation of a publicly listed company, Shah said. So taxing that hurts entrepreneurialism and ultimately the investment that policymakers want, he argued. Regardless, India’s 20% levy on buybacks went into effect after the annual budget was passed July 23. Some businesses had already abandoned plans for share repurchases after the Modi administration announced the plan on July 5.A long-term capital gains tax of 10% on a stock appreciation of more than 100,000 rupees A 10% tax on dividends paid out by equity mutual funds
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