Clause 36B of Form 3CD — Share Buyback Reporting u/s 2(22)(f)

FORM 3CD – NEW CLAUSE, INSERTED FROM 1 APRIL 2025

Clause 36B of Form 3CD – reporting share buyback receipts under the new deemed-dividend regime.

Buybacks completed on or after 1 October 2024 are taxed as deemed dividend in the shareholder’s hands under section 2(22)(f) – and Form 3CD now asks the tax auditor to surface them. Here is what clause 36B wants, and the working papers to keep.

What clause 36B asks

Whether the assessee RECEIVED any amount on buyback of shares as referred to in section 2(22)(f) during the previous year – and if yes, two figures:

ItemDetail
(i) Amount receivedThe gross buyback consideration received on tenders completed on or after 1 October 2024.
(ii) Cost of acquisitionThe COA of the shares bought back – relevant because the full receipt is deemed dividend (taxed as income from other sources) while the cost generates a capital LOSS available for set-off/carry-forward under the capital gains rules.
The clause sits on the RECIPIENT side – it applies to the audited assessee who tendered shares in a buyback, not to the company doing the buyback.

The regime shift behind it

Up to 30 September 2024, listed-company buybacks bore buyback distribution tax in the company’s hands and the receipt was exempt for the shareholder under section 10(34A). From 1 October 2024 (Finance (No. 2) Act 2024) that flipped: the company pays no buyback tax, the entire consideration is deemed dividend under section 2(22)(f) for the shareholder – with NO deduction for cost – and the cost of the tendered shares becomes a capital loss.

What the auditor verifies

CheckWorking papers
Date test – only buybacks completed on/after 1-10-2024 enter 36BBuyback offer documents, settlement/payment date evidence
Amount receivedContract notes, bank credits, demat transaction statement
Cost of acquisition of tendered sharesPurchase contract notes / demat holding statement; FIFO where lots mix
Tax treatment consistencyReceipt offered as dividend income; capital loss computed with COA; TDS u/s 194 traced to 26AS
Trap: a buyback ANNOUNCED before 1 October 2024 but settled after can fall in the new regime – the completion/receipt date drives it. And earlier-regime receipts (exempt u/s 10(34A)) do NOT belong in 36B; keep them out.

Running the whole 3CD this season?

The clause-wise checklist Excel has 36B flagged as a NEW clause with its document list – engagement to sign-off in one workbook.

Download the 3CD Checklist Excel

Frequently asked questions

Who does clause 36B apply to?
The audited assessee who RECEIVED buyback consideration on or after 1 October 2024 – typically an investor-assessee under tax audit for business reasons. It asks for the amount received and the cost of acquisition of the shares bought back.
How is a post-October-2024 buyback taxed?
The full consideration is deemed dividend under section 2(22)(f), taxable as income from other sources with no cost deduction; the cost of acquisition becomes a capital loss eligible for set-off and carry-forward under the capital gains provisions.
Do buybacks before 1 October 2024 enter clause 36B?
No – those fell under the old regime (buyback tax in the company’s hands, receipt exempt under section 10(34A)) and stay outside the clause. The completion/receipt date decides which side of the line a buyback falls.

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