Infosys has opened its biggest-ever share buyback worth Rs 18,000 crore, via the tender-offer route at a fixed price of Rs 1,800 per share. With the stock opening at Rs 1,555, the premium may appear attractive to many shareholders.
However, the new taxation rules and eligibility criteria make it crucial to evaluate the decision carefully. Here are the eight most important checks before participating.
Also Read: Shares of Sammaan Capital Fall 13% After SC Criticises CBI’s Handling of Investigation
1. Eligibility: Only Record-Date Shareholders Qualify
Only investors who held Infosys shares on the record date—November 14, 2025—are eligible.
Anyone who purchased shares after this date cannot tender.
Since Infosys is buying back only 2.4% of its equity, acceptance ratios may remain modest.
2. New Tax Rules: Entire Buyback Amount Is Taxable
Under the revised tax structure:
-
The buyback proceeds are considered “income from other sources”.
-
This income is taxed based on your individual slab rate, not capital gains rates.
-
For investors in the 30% tax bracket, the tax impact can significantly reduce or even wipe out the buyback premium.
-
Importantly, the entire buyback amount is taxable, not just the gains.
Earlier, buyback income was tax-exempt for shareholders because the company paid a 20% buyback tax. That benefit is no longer applicable.
3. Compare With Selling Shares in the Market
Selling shares on the exchange may be more tax-efficient depending on the holding period:
-
Long-term capital gains (holding > 12 months): Taxed at 12.5% (including surcharge and cess).
-
Short-term capital gains: Taxed at 20% irrespective of the tax slab.
Shareholders should compare these outcomes before choosing between tendering and selling on the market.
4. Section 87A Rebate: Old vs New Tax Regime
Tendering becomes tax-efficient only if your total taxable income stays within the rebate limits.
New Tax Regime
If your total income—including the buyback proceeds—does not exceed Rs 12 lakh, you can claim the Section 87A rebate, eliminating tax on the buyback income.
Old Tax Regime
If your total income is up to Rs 5 lakh, you can claim rebate on capital gains when selling shares on the exchange.
Tax efficiency also improves for investors who have capital gains to set off against capital losses arising from the buyback structure.
5. Cost of Acquisition Not Deductible
A key rule change is that your purchase cost is not deductible from buyback income.
Instead, this cost becomes a capital loss:
-
Short-term capital loss (STCL) can be set off against both short-term and long-term capital gains.
-
Long-term capital loss (LTCL) can be set off only against long-term gains.
Unadjusted losses can be carried forward for up to eight years, provided tax returns are filed on time.
6. Expect TDS on Proceeds
Infosys will deduct TDS at 10% on amounts above Rs 1,000.
Investors in lower slabs may face temporary liquidity issues due to refunds, so they should plan cash flows accordingly.
7. Promoters Not Participating
Infosys promoters have opted not to tender their shares.
This slightly improves the acceptance ratio for public investors but does not guarantee full acceptance, especially for those holding larger quantities.
Additionally, no grandfathering benefit exists for older share purchases under the revised rules.
8. Check Your “Small Shareholder” Status
Investors whose holding value was Rs 2 lakh or below on the record date qualify as “small shareholders”.
This category receives a higher reserved quota, improving acceptance chances.
Conclusion
The Infosys buyback offers an attractive premium on paper, but the new tax rules substantially change the actual payout for investors.
Shareholders must evaluate their tax slab, holding period, loss set-offs, and eligibility before deciding. For some, selling in the open market may be more tax-efficient, while others—especially small shareholders or those within rebate limits—may find the buyback beneficial.
A careful comparison of post-tax outcomes is essential before tendering shares.
Disclaimer
This article is strictly informational and based solely on the details provided in the source content. It does not offer investment advice, tax guidance, or recommendations. Investors should consult their financial advisor or tax professional before making any decision.
Click here to explore: Infosys