For years, share buybacks have been one of the most founder-friendly liquidity tools in India’s startup ecosystem. They allowed founders and early employees to unlock partial liquidity without selling control, while offering companies a clean way to reward long-term contributors. But Union Budget 2026 may have quietly rewritten that playbook.
In what policymakers describe as a move to “rationalise taxation and plug arbitrage,” the Budget has reworked the tax treatment of share buybacks—especially for unlisted companies. While the intent is fiscal clarity, the fallout is being felt most sharply by startup founders and ESOP holders.
What Changed In Budget 2026?
Until now, buybacks by unlist
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