Answer

1. F

   Facts

   When a company wants to provide liquidity to employees without an IPO or acquisition, it can do a share buyback. Company buys back vested, exercised shares from employees at a determined price.

2. P

   Provisions and law

   • Companies Act 2013, Sec 68-70 | IT Act, Sec 115QA
3. A

   Analysis

   Tax on buyback (company): Sec 115QA, company pays 20% tax on buyback consideration (abolished for listed companies from Oct 2024, but still applicable for unlisted companies). Tax on buyback (employee): Post-Oct 2024 amendment, buyback proceeds are now taxed as dividend income in the hands of the shareholder, not capital gains. This can push employees into 30% slab vs previous capital gains rates. Important change from FY 2024-25.

4. C

   Conclusion

   Talk to a Savvy for the exact next step on your case.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.