On 11.5.2017, Rama Ltd purchased its own shares having face value of ₹ 10. Amount offered to shareholders was ₹ 80 per share. Total amount distributed by Rama Ltd on buy back of 15,000 shares is ₹ 13,50,000. These shares

Tax Liability of Kaka (Shareholder): As share of Rama Limited are unlisted, Kaka is not chargeable to tax for Capital Gains which is exempt under section 10(34A) of the Income Tax Act, 1961. Tax Liability of Rama Limited as per section 115QA Particulars Amount (₹) Amount paid to shareholders at the time of buyback (₹ 90*15000) 1350000 Less: Amount received at the time of issue of share (₹ 25*15000) (375000) Distributed Income to shareholders because of buy back 975000 Tax on distributed income @ 20% 195000 Surcharge @ 12% 23400 Tax and Surcharge 218400 Add: EC + SHEC @ 3% on Tax and Surcharge 6552 Tax liability u/s 115QA 224952 Note: The offered price was ₹ 80/- per share but actual amount paid for 15000 shares is ₹ 13,50,000 which gives the rate per share as paid by the company of ₹ 90/- per share.