Share Buyback Tax: What You Owe After April 2026

From April 1, 2026, money you earn from a company buying back its own shares is taxed as capital gains in your hands — not at the company level. If you held Bajaj Auto or any stock and it got bought back, you must report and pay tax on the profit yourself.

Here's what happened: Before April 2026, companies paid a 20% buyback tax themselves — shareholders received proceeds tax-free in their hands.. From April 1, 2026, the buyback tax on companies is abolished; instead, shareholders pay capital gains tax on profits from accepted buyback shares.. Short-term gains (held under 12 months) attract 20% tax; long-term gains (over 12 months) above ₹1.25 lakh are taxed at 12.5% under the new rules..

What you should do: Check your demat account to confirm whether your shares were accepted in the buyback and note the original purchase date and price.. Calculate your cost of acquisition versus the buyback offer price to determine your exact capital gain before filing ITR.. Report the gain under the correct capital gains head in your ITR — short-term or long-term — and pay advance tax if the liability exceeds ₹10,000..

Your cost basis for buyback tax is the original price you paid for the shares — not the buyback offer price. Keep your contract notes or demat statements as proof to avoid scrutiny.