Budget 2026 Tax Shift

From April 2026, if a company buys back its shares, you pay capital gains tax (20%) on your profit — not income tax at your full slab rate. This makes buybacks much more rewarding for investors, especially high earners.

Here's what happened: From 1 April 2026, share buyback proceeds are taxed as capital gains, not as dividend income under your income tax slab.. Earlier, the entire buyback amount you received was treated as dividend — meaning top-slab taxpayers paid up to 30% plus surcharge.. Now only your actual profit (sale price minus your original cost) is taxed at 12.5% or 20% under capital gains rules, significantly reducing your tax burden..

What you should do: Check if any stocks you hold have announced buybacks — Wipro and Bajaj Auto are currently running offers worth reviewing.. Calculate your acquisition cost carefully before tendering shares in a buyback, as your taxable gain is now cost-price dependent.. If you are in the 30% income tax bracket, compare whether tendering in the buyback or selling in the open market gives you a better post-tax return..

Long-term capital gains up to ₹1.25 lakh per year are tax-free. If your buyback gain stays under this threshold, you may owe zero tax — plan your participation accordingly.