The Hindu Business Line : FICCI paper on share buyback

The buyback of shares by companies should be exempted from Capital Gains Tax, says a paper on securities market regulation prepared by industry chamber FICCI and Society of Indian Law Firms.

In the case of buyback of shares, gains are subject to Capital Gains Tax because the transaction is not through the exchange and there is no incidence of Securities Transaction Tax. "It would be in fitness of things to exempt even the buyback offers and put it on a par with secondary market transactions," according to the paper.

While the ultimate power for attachment of bank accounts of intermediaries should rest with the Central Board of Direct Taxes only, it is important that strong surveillance mechanism be put in place so that the regulator knows the happenings in advance, according to the paper.

"Similarly, for search and seizure, this mechanism should be adhered to in letter and spirit," the paper says.

Also, the use computers and Internet should be enabled to enhance the efficiency of the disclosure process, the paper suggests.

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