Section 69 — Capital gains on purchase by company of its own shares or other specified securities. Successor to s.46A of the 1961 Act.
Section 69 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
Sub-section (1) charges the shareholder: where a shareholder or holder of other specified securities receives consideration from a company for the purchase of its own shares or securities held by him, the difference between the cost of acquisition and the consideration received is deemed to be capital gains arising to him in the year the company purchases them, subject to section 72.
Sub-sections (2) and (3) were substituted by Act No. 4 of 2026 with effect from 1 April 2026. Sub-section (2) adds a second layer where the buy-back is made in accordance with section 68 of the Companies Act, 2013 and the shareholder is a promoter: the aggregate income-tax is (a) the income-tax payable on the gains under the Act, plus (b) additional income-tax at the Table rates. Table Sl. No. 1 covers short-term capital gains referred to in section 196 at 2% where the promoter is a domestic company and 10% where he is not; Sl. No. 2 covers long-term capital gains referred to in section 197 or 198 at 9.5% and 17.5% respectively.
Sub-section (3) defines "promoter" — regulation 2(k) of the sebi (Buy-Back of Securities) Regulations, 2018 for a listed company, and otherwise a promoter as defined in section 2(69) of the Companies Act, 2013 or a person holding, directly or indirectly, more than 10% of the shareholding — and "specified securities" by reference to Explanation 1 to section 68 of the Companies Act, 2013. The pre-substitution sub-section (2), which deemed consideration of the nature referred to in section 2(40)(f) to be nil, no longer operates.
A buy-back returns company money to shareholders in a form taxed as capital gain rather than as a distribution, and promoters are best placed to time and size that return. The substituted sub-section (2) leaves the ordinary charge intact but layers an additional tax on the promoter's gain, at rates turning on whether the promoter is itself a domestic company. The wide promoter definition means the extra charge does not depend on how the company labels its shareholders.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Additional income-tax on short-term capital gains, domestic company promoter | 2% | Short-term capital gains referred to in section 196 from a buy-back under section 68 of the Companies Act, 2013 | Sub-section (2), Table Sl. No. 1, column C |
| Additional income-tax on short-term capital gains, other promoter | 10% | Same gains, promoter other than a domestic company | Sub-section (2), Table Sl. No. 1, column D |
| Additional income-tax on long-term capital gains, domestic company promoter | 9.5% | Long-term capital gains referred to in section 197 or section 198 from such securities | Sub-section (2), Table Sl. No. 2, column C |
| Additional income-tax on long-term capital gains, other promoter | 17.5% | Same gains, promoter other than a domestic company | Sub-section (2), Table Sl. No. 2, column D |
| Shareholding at which a person is a promoter of an unlisted company | More than 10% of the shareholding | Held directly or indirectly, where the shares are not listed on a recognised stock exchange in India | Sub-section (3)(b)(ii) |
Sub-section (1) taxes every shareholder on the difference between cost of acquisition and consideration, in the year the company purchases — not when the offer opens or the money arrives. A promoter then faces the Table charge, which is additional to the ordinary tax in sub-section (2)(a), and which column applies turns on the promoter's own status. The additional charge is confined to a buy-back made in accordance with section 68 of the Companies Act, 2013. Anyone holding more than 10% of an unlisted company, directly or indirectly, is a promoter even if the company's records do not say so.
An individual holding 15% of an unlisted company tenders his shares in a buy-back under section 68 of the Companies Act, 2013, realising a long-term capital gain of Rs 2 crore. He pays the ordinary tax on that gain, and because he is not a domestic company, column D of Table Sl. No. 2 adds income-tax of 17.5%, that is Rs 35 lakh. His 15% holding makes him a promoter whatever the company's filings call him.
On a company's buy-back offer under section 68 of the Companies Act, 2013 — the shareholder computes the gain in the return for the year of purchase, and a promoter works out the additional income-tax as well. A non-promoter shareholder meets only sub-section (1).
a person who holds, directly or indirectly, more than 10% of the shareholding in the company
See the full 1961 to 2025 concordance.