Buyback vs dividend — how the tax changed (Oct 2024)

✍️ EaseValue Advisors · Updated 17 Jul 2026 · FY 2025-26

In short

Since 1 Oct 2024, a share buy-back is taxed in the shareholder's hands (like a dividend) — so the old buyback tax-arbitrage is gone. Here's how to compare returning cash now.

What changed

Earlier the company paid buyback tax and the shareholder received the amount tax-free. From 1 Oct 2024, the buyback amount is taxable as a deemed dividend in the shareholder's hands, and the cost of the bought-back shares becomes a capital loss.

Planning now

For a high-cost or loss shareholder, buyback can still help — the capital loss offsets other gains.
Otherwise dividend vs buyback is broadly tax-neutral — decide on commercial grounds (control, EPS, cash).

The law behind it

Section 69 (buyback capital gains) Income-tax Act 2025

← Back to the Tax-Saving Map

General information for FY 2025-26 (AY 2026-27), not advice on your specific case. Limits, rates and conditions change with each Finance Act and depend on your facts — confirm before acting. © EaseValue Advisors LLP.

More tax savings6

Salary structuring — build a tax-efficient CTC How you split your CTC changes your take-home. Routing pay i... Health insurance — Section 80D (₹25,000 to ₹1,00,000) Premiums for health insurance are deductible under Section 8... Capital gains — every legal way to save (or zero) your tax,... Sold property, shares, gold or any asset? There are a dozen-... Section 54 — reinvest your house-sale gain and pay ₹0 capita... If you made a long-term gain on a residential house, reinves... HRA exemption — make a big part of your rent tax-free (Secti... If you're salaried and pay rent, the HRA exemption makes a l... Standard deduction — ₹75,000 flat off your salary Every salaried person and pensioner gets a flat standard ded...

Want the right structure for your family or business?

We design the entity/HUF/trust structure that legally taxes your income the least — and set it up correctly.

💬 Plan my structure