Buyback tax treated as capital gains from April 1, 2026
Heads up, investors: starting April 1, 2026, the tax on share buybacks is getting a makeover.
Under the earlier buyback-tax regime, companies paid the tax and shareholders don't have to think about it.
But soon, if you sell shares back to a company, you'll be taxed on your profit (the difference between what you paid and what you get), either as short-term or long-term capital gains depending on how long you held the shares.
Non promoter investors pay buyback tax
This shift mainly affects non-promoter shareholders (basically, most everyday investors).
Instead of companies handling the tax bill, individual shareholders will need to pay taxes themselves, at their income slab rate if they held shares less than a year (STCG) or at 12.5% on LTCG gains exceeding ₹1.25 lakh in a financial year for listed shares held over a year (LTCG), with special rules for unlisted shares.
Experts suggest it's time to review your portfolio and plan ahead so there aren't any surprises when these new rules kick in.