Share buyback and capital reduction tax — where does doing it myself start to cost money?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the characterisation of the payment between distribution and consideration determines who is taxed and at what rate, and deemed-dividend rules can recast part of it.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Is a buyback taxed as a dividend or as a capital gain in India?
That characterisation is the whole question, and it decides who pays rather than merely how much. Treated as a distribution, the charge sits with the company and the shareholder receives the payment already reduced. Treated as consideration for the shares, the shareholder is taxed on the difference between the price received and the cost of those shares. The rules in force for the year of the resolution govern which applies, and they have not stood still, so we check the position for that year before the board commits to a route rather than relying on how the last buyback was handled.
As an NRI, will tax be deducted before the buyback money reaches me?
Expect the company to withhold something, and expect it to be computed on the characterisation the company has adopted, which may not be the one you would argue for. Withholding is a collection step, not a final assessment. If the deduction proceeds on a footing you disagree with, the place to establish your own position is the Indian return, supported by the share history and the treaty article that follows from the correct characterisation. Ask the company in writing which basis it has applied and on what value, before the proceeds are remitted. That answer is far harder to obtain afterwards.
What is the difference between a buyback and a capital reduction for tax?
Commercially they can deliver the same cash to the same shareholders. For tax they are separate routes with separate consequences. A buyback is the company purchasing its own shares. A capital reduction reduces the company's capital and returns the funds to shareholders under a sanctioned scheme. India taxes the two differently, in different hands and at different points, and deemed-dividend rules can recast part of a payment framed as a return of capital into a distribution. Choosing between them is therefore a tax decision as much as a corporate one, and it belongs before the documents are drafted.
Which treaty article applies to a buyback payment to a foreign shareholder?
It follows the characterisation rather than the label on the payment. If the payment is a distribution, the dividend article is in point. If it is consideration for shares, the capital gains article is, and those two articles rarely produce the same result for the same money. That is why the characterisation question has to be settled before the treaty is opened, not after. We work in that order: establish how the payment is characterised under Indian law for the year, read the article that follows, then test what the company actually deducted against that position.
Can part of a capital reduction be treated as a deemed dividend?
It can. The deemed-dividend rules exist precisely because a payment labelled a return of capital can carry something else inside it, and where they apply the payment is split rather than recharacterised whole. What decides the split in practice is the company's own record: what was subscribed, what was capitalised, what has been distributed before, and how the reduction was resolved. Those records are usually assembled long after the event, under pressure from a query. Preparing them alongside the scheme, while the amounts are still being agreed, is materially cheaper than reconstructing them later.
The company says nothing will be deducted on the buyback, should I accept that?
Get the basis in writing before you rely on it. A statement that nothing will be deducted is a statement about which characterisation the company has adopted and about its own view of its obligations. It is not a ruling, it does not bind the department, and it does not protect you. Ask which basis was applied, for which year, and on what value. If the company's view is right, your Indian return simply reflects it. If it is not, you hold the correspondence, and the exposure is identified before the money moves rather than when a notice arrives.
Can an NRI claim back TDS deducted on Indian income?
Yes, by filing an Indian return for the year. Withholding on rent, interest, dividends, professional fees or a property sale is an advance payment, not a final tax, so where the actual liability is lower — because of the treaty, because of the basic exemption, or because the deduction was computed on gross proceeds rather than gain — the excess comes back as a refund. It needs your PAN, a validated Indian bank account and the deductor's statement filed. See Indian filing and credit claims.
Is dividend income from Indian shares taxable for an NRI?
Yes. Dividends are taxed in the shareholder's hands, and the paying company withholds on payment to a non-resident. The treaty can reduce that withholding, but only if the documents are with the company before it pays: a tax residency certificate from your country, Form 10F, and a PAN on the register. Without them the domestic rate applies and your route back to the difference is a refund claim on an Indian return. See residency certificates and Form 10F.
