Article

Buyback taxation under the Finance Act, 2026

CA Prajakta Mondhe · Taxguru Free Intermediate India

A chartered accountant's walk-through of how a buyback of shares is taxed from 1 April 2026, including the additional tax on promoters and who counts as one.

  • Buyback proceeds are taxed as capital gains in the shareholder's hands again, ending the dividend treatment of October 2024 to March 2026.
  • A promoter pays an additional tax on top; in an unlisted company a promoter includes anyone holding more than 10% of the shares.
  • For an individual promoter the effective rate on a long-term gain comes to about 30%, with a 12% surcharge on the additional tax.
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Curated reading that points you to the sources, not personalised investment advice.

It answers 5 questions

  1. How am I taxed if the company buys back my shares instead of an outside buyer?
  2. What's the difference between a secondary and the company doing a buyback?
  3. After April 2026, is a buyback or a secondary sale better for me as a founder?
  4. What does the new Income-tax Act, 2025 change for me personally?
  5. My company offered to buy back some of my vested ESOPs. Should I take it?

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