For companies and promoters, the buyback tax regime continues to represent stability rather than change, with overall liabilities largely unaffected. Under the earlier system, buyback proceeds were treated as dividend income, requiring promoters to pay tax at 22%. This was structured to prevent tax arbitrage, as promoters could otherwise have used buybacks to avoid dividend distribution tax and reduce their liability. Restoring Fair Taxation Manvinder Singh, Partner at JSA Advocates & Solicitors, said, “The Finance Bill, 2026 proposes to restore the taxation of share buybacks under the capital gains framework by correcting an unintended anomaly introduced in October 2024, where even the original investment was taxed as income. This change brings fairness and repositions buybacks as a legitimate mechanism for returning capital.”