Buyback Taxation

From April 1, 2026, buybacks will be taxed more favorably for retail investors, with capital gains only on the profit portion (not the full buyback amount) at 12.5% for long-term holdings, and an exemption for gains up to 1.25 lakh per PAN. This change is expected to be significant in the next financial year.

Companies with high cash on their balance sheets, especially among the NSE small cap 250 that have fallen the most, have a higher probability of announcing buybacks due to reduced taxation, which will be beneficial for shareholders.