Beginning April 1, 2026, new income tax regulations in India will significantly change how share buybacks are taxed for individual investors. Previously, buybacks were treated under a dividend-based model, but under the new rules, they will fall under a capital gains model. According to Pankaj Mathpal, CEO & MD at Optima Money Managers, this means that the difference between the buyback price and the cost of acquisition will be taxed as either short-term capital gains (STCG) or long-term capital gains (LTCG), depending on how long the shares have been held. For shares bought and sold within one year, STCG will apply, while shares held for over a year will be subject to LTCG. Jitendra Solanki, a SEBI-registered tax and investment expert, noted that prior to April 2024, companies had to pay a 20% tax on the amount used for buybacks, with proceeds to shareholders being exempt. However, from April 2024 to March 2025, buyback proceeds will be treated as deemed dividends, taxable at individual slab rates. The new capital gains model will apply to non-promoter shareholders, making it crucial for investors to reassess their strategies in light of these changes.