What the Income-tax Act 2025 means for promoter shareholding.

The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. The Income Tax Department describes it as a simplification. Parliament passed the Bill on 12 August 2025, the President assented on 21 August 2025, and the Income-tax Rules, 2026 were notified on 20 March 2026. Commentators such as RSM India note that the government intended no major change in tax policy or rates.

That does not mean nothing matters for promoters. Three provisions deserve a careful read, one because Parliament changed the tax outcome and two because the drafting differs from the old sections they replace. This is a reading guide, not a tax opinion, and the figures below should be checked against the Act as amended by the Finance Act 2026.

1. Buy-backs: section 69

Since 1 October 2024, buy-back proceeds had been taxed in shareholders' hands as dividend. Under section 69 of the 2025 Act, as amended by the Finance Act 2026, the difference between the cost of acquisition and the consideration received is treated as capital gains, from 1 April 2026.

Promoters are treated differently. The section levies an additional income-tax on promoters' capital gains from a buy-back:

• Short-term gains: 2% additional for a promoter that is a domestic company, 10% for other promoters.
• Long-term gains: 9.5% additional for a promoter that is a domestic company, 17.5% for other promoters.

Professional commentary reads these as taking the long-term rate for promoters to about 22% and 30% in aggregate, on top of a 12.5% base rate. RSM India also notes a 12% surcharge on the additional tax. The additional tax applies only to buy-backs under section 68 of the Companies Act 2013.

"Promoter" for a listed company follows the SEBI Buy-Back Regulations. For an unlisted company it covers a promoter under the Companies Act definition or anyone holding more than 10%. The unlisted-company test matters for family groups where several relatives or entities each hold a stake near that line.

2. Loss carry-forward: section 119

Section 119 replaces old section 79, which limits carry-forward of losses for companies in which the public are not substantially interested. Under section 119(3), shares carrying not less than 51% of the voting power must have been beneficially held by the same persons on the last day of the tax year and on the last day of the year or years in which the loss arose.

For promoter-led companies with accumulated losses, any change in who holds beneficial voting power, including a fundraise, a transfer within the family or a restructuring, should be tested against this section before it happens. RSM India has flagged that changes in wording from the old provision could invite arguments about how narrowly the continuity test applies. We have not seen that point settled, so treat it as an open question.

3. Associated enterprises: section 162

Section 162 defines associated enterprises for transfer pricing, replacing section 92A. Among its tests are an enterprise holding, directly or indirectly, shares carrying at least 26% of voting power in another, a loan of at least 51% of the book value of the other's total assets, and a guarantee of at least 10% of its total borrowings. It also covers control over management or board appointments and family control relationships.

Promoter groups with entities under common control, or with loans and guarantees between group companies, should confirm which relationships fall within these tests, and that transactions between them are documented accordingly.

What to do with this

These are considerations for boards and promoter groups, not personalised advice.

• Boards discussing any buy-back might ask how each significant holder is classified as promoter under the applicable definition, and what tax outcome that produces compared with other routes.
• Groups with unlisted companies might map holdings against the 10% threshold, including indirect holdings.
• Companies with brought-forward losses might record beneficial voting power at each year-end and test proposed changes against the 51% condition first.
• Finance teams might update the associated-enterprise list against section 162, and check whether intra-group loans and guarantees cross the thresholds.
• All of the above should be confirmed with a tax adviser against the current text as of September 2026, since further amendments and clarifications are possible.

This article is general information and not legal, tax or investment advice.