In India, the taxation of income from the stock market is governed by distinct rules for dividends, bonus shares, and buybacks under the Income Tax Act. Dividends are now fully taxable to investors following the abolition of the Dividend Distribution Tax (DDT) in 2020, benefiting foreign investors who can now access tax treaty benefits. The tax rate on dividends is uniform across all investors, but high net worth individuals (HNIs) face a 15% surcharge on incomes exceeding ₹1 crore (roughly $120,000 USD), leading to an effective tax rate of 34.5% for them, compared to 15% for retail investors. Bonus shares are not taxed at the time of allotment; however, upon sale, they are treated as capital gains with a cost of acquisition deemed as nil. The applicable tax rates depend on whether the shares are classified as long-term or short-term capital assets. Buybacks, previously tax-free for investors, are now taxed as capital gains, with different rates for listed and unlisted shares based on the holding period. Accurate reporting in the income tax return (ITR) is essential, with dividends reported under 'Income from Other Sources' and capital gains from bonus shares and buybacks detailed separately.