IPO Buyback Tax Calculator

Buyback taxation changed again in Union Budget 2026 — proceeds are now taxed as capital gains in the shareholder's hands, with an additional levy for promoters. This calculator uses the current regime.

Tax Payable (LTCG @ 12.5%)

₹0

Taxable gain: ₹0.

Gross Gain

₹3,000

Net Proceeds (after tax)

₹18,000

Company also withholds TDS (10% resident / 20% non-resident) on payment — a separate withholding, not shown above, adjusted against your final liability at return filing.

How the IPO Buyback Tax Calculator works

This is a rules change worth flagging directly: for buybacks between 1 Oct 2024 and 31 Mar 2026, the entire buyback amount was taxed as deemed dividend at the shareholder's income-tax slab rate. That regime closed on 31 March 2026. Union Budget 2026 replaced it, effective 1 April 2026, with a capital gains regime: your taxable gain is buyback price − cost of acquisition, classified as STCG or LTCG by how long you held the tendered shares, and taxed at the same 20%/12.5% rates (with the ₹1.25 lakh LTCG exemption) used for any other equity sale. This calculator computes the current (post-1-April-2026) regime, since that's what applies to any buyback happening now.

Promoters (and non-corporate promoter entities) carry an additional levy on top of ordinary capital-gains tax, reported as an effective total tax burden of 30% for individual/ non-corporate promoters and 22%for promoter companies. The exact base-rate-plus-additional-levy mechanics aren't fully detailed in public guidance at the time of writing, so this calculator applies the reported effective rate directly to the full gain for promoter cases — treat this as an estimate and verify with a CA before relying on it for an actual promoter buyback.

Separately, the company deducts TDS on buyback payments — 10% for resident shareholders, 20% for non-residents — at the time of payment. This is a withholding, not your final tax liability, so it is not subtracted in the result above.

Disclaimer: This calculator is for educational purposes only and does not constitute investment advice. Always read the Red Herring Prospectus and verify current rates before applying for any IPO.

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Frequently Asked Questions

How is buyback tax calculated now, in 2026?

For buybacks on or after 1 April 2026, tax is calculated as ordinary capital gains: (buyback price − cost of acquisition) × shares tendered, classified as STCG (20%) or LTCG (12.5%, with ₹1.25 lakh exemption) by holding period — the same treatment as a normal share sale.

Did buyback tax rules change recently?

Yes, twice in two years. Before October 2024, the company paid buyback tax and proceeds were tax-free to shareholders. From October 2024 to March 2026, the full buyback amount was taxed as deemed dividend at the shareholder's slab rate. From April 2026, it moved to the current capital-gains regime.

What is the promoter surcharge on buyback tax?

Promoters face an additional levy on top of ordinary capital-gains tax, reported as an effective total tax burden of 30% (individual/non-corporate promoters) or 22% (promoter companies) — higher than the standard 20%/12.5% rates non-promoters pay.

Is TDS deducted on buyback proceeds?

Yes — the company withholds TDS at 10% for resident shareholders and 20% for non-residents when paying out buyback consideration. This is adjusted against your final tax liability when you file your return; it isn't the final tax amount itself.

What if the buyback happened before April 2026?

A buyback settled between 1 October 2024 and 31 March 2026 falls under the older deemed-dividend regime — the full amount was taxable at your income-tax slab rate, not under capital gains. This calculator reflects the current post-April-2026 regime only.