By IndiaHub 
A buy-back happens when a business buys back its own shares from present shareholders, usually at a higher price than the going rate in the market. Since October 1, 2024, there have been substantial changes to the tax treatment of such transactions.
Under the new rules, the company no longer has to pay buy-back tax. Instead, the money received by shareholders is taxed as a “deemed dividend” under Section 2(22)(f) of the Income-tax Act, 1961.
This deemed dividend is taxed at the applicable rate under the heading of Income from Other Sources, and it is important to note that the tax is charged on the gross amount received rather than the profit portion. Furthermore, no deductions are permitted under Section 57 for this income. However, the cost of acquiring such shares (tendered in the buy-back) is considered a capital loss.
The type of capital loss depends on how long these shares have been owned. If you retain listed shares for more than 12 months, you will incur long-term capital loss (LTCL), whilst holding them for 12 months or less will result in short-term capital loss.