Answer

1. F

   Facts

   From 1 October 2024, the amount received on a buyback is treated as dividend in the shareholder's hands and taxed at slab rates. The cost of the shares bought back is treated as a capital loss. That loss can be set off against other capital gains.

2. P

   Provisions and law

   • Sec 2(22)(f), Income-tax Act 1961Amount received on a buyback of shares by a company is treated as dividend from 1 October 2024
   • Sec 70 (now Sec 108)Set off within the same head: short-term capital loss against any gain, long-term loss only against long-term gain
   • Sec 74 (now Sec 111)Capital loss carried forward for 8 years; long-term loss only against long-term gains
3. A

   Analysis

   Suppose you received ₹2,00,000 for shares that cost ₹1,20,000. The ₹2,00,000 is dividend income under Sec 2(22)(f), and ₹1,20,000 is a capital loss, short or long term by holding period. TDS on the buyback, if any, is claimed as credit. Check how the AY 2026-27 utility asks for these entries, since this is a new treatment.

4. C

   Conclusion

   1. 1Get the buyback statement showing amount and TDS.
   2. 2Show the amount as dividend under other sources.
   3. 3Report the cost as a capital loss with nil sale value.
   4. 4Set off or carry forward the loss.

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