What is ESOP buyback taxation?

When a company buys back vested ESOPs from employees, the gains for the employee are typically taxed as capital gains. The tax treatment depends on whether the shares are listed or unlisted and the holding period.

Startup Example: A late-stage startup conducts an ESOP buyback program. An employee who sells shares they have held for more than 24 months will be taxed under long-term capital gains.

We provide tax advisory for such corporate actions.