With an aim to reduce litigation and easing burden of compliance, the Income-Tax Department said the amount received on buyback of shares between period April 1, 2000 and May 31, 2013 will be taxed as capital gains and not dividend in the hands of the recipient.
"On the issue of consideration received on buyback of shares between the period April 1, 2000 to May 31, 2013 it has been clarified that such consideration will be taxed as capital gains in the hands of the recipient. Such amount will therefore not be treated as dividend. No fresh notice will be issued by the Department on this matter," a finance ministry statement said. It would mean that the amount received by the companies between April 1, 2000 and May 31, 2013 will be subject to capital gains tax, it added.