Budget 2026 : Government to tax buybacks as capital gains: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman, during her Budget speech on Sunday (February 1, 2026) said buyback proceeds for all types of shareholdres will be taxed as capital gains.

She said, “Change in taxation of buyback was brought in to address the improper use of buyback root by promoters, and in the interest of minority shareholders, the government will tax buybacks for all types of shareholders as capital gains.”

Ms. Sitharaman was presenting her ninth Budget in the Parliament on Sunday (February 1, 2026). This is the first time in the history of India that the Union Budget is being presented on a Sunday.

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The Finance Minister said to incentivize misuse of tax arbitrage, the promoters will pay an additional buyback tax. “This will make effective tax 22% for all corporate promoters and for non-corporate promoters it will be 30%.”

The buyback option is among the final avenues for investors to exit a company without incurring tax liabilities, as the tax was previously paid by the company.