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Infosys has opened the window for its largest-ever share buyback — a Rs 18,000 crore programme via the tender-offer route
Infosys Share Buyback
Infosys Buyback Open Now: Infosys has opened the window for its largest-ever share buyback — a Rs 18,000 crore programme via the tender-offer route at a fixed price of Rs 1,800 per share. For many investors, the premium over the current market price appears attractive.
Small shareholders can tender 2 shares for every 11 held as of the November 14 record date, while general-category shareholders can tender 17 shares for every 706 held. Kotak Mahindra Capital Company Limited is managing the buyback, and KFin Technologies Limited is acting as registrar.
Infosys said the buyback aligns with its medium-term operational and strategic cash needs and ensures efficient return of surplus cash to shareholders in line with its capital allocation policy.
Purpose of the Buyback
Infosys aims to steadily increase its annual dividend per share (excluding special dividends). It believes the buyback will enhance long-term shareholder value by reducing the equity base.
Notably, the promoters — including Nandan M. Nilekani and Sudha Murty — will not participate in the buyback. The promoter and promoter group collectively hold 13.05% of Infosys’ equity as of the announcement date.
Key things to evaluate before tendering your shares
1. Confirm your eligibility
Only shareholders who held Infosys shares on the November 14, 2025 record date qualify for the buyback. If you bought shares after this date, you cannot participate.
Infosys is buying back only 2.4% of its equity, so acceptance ratios—especially for larger holdings—may be modest. While the offer price of Rs 1,800 carries a sizable premium, the real benefit depends on post-tax proceeds.
2. Understand the new taxation rules
Buyback proceeds are now treated as “income from other sources” and taxed at your income-tax slab rate, not under capital gains.
If you fall in the 30% bracket, the tax outgo can significantly reduce — or even eliminate — the premium.
Importantly, the entire buyback amount is taxable, not just the profit component.
Previously, the company paid a 20% buyback tax and the income was tax-exempt for investors — but this benefit has been removed.
3. Compare with selling in the open market
If you sell your shares through the exchange instead:
- Long-term capital gains (holding > 12 months) → Taxed at 12.5% (including surcharge + cess)
- Short-term capital gains → Taxed at 20%, regardless of slab
Depending on your tax bracket, selling in the open market could be more efficient.
4. Impact of Section 87A rebate (old vs new tax regime)
Tendering shares may be tax-efficient if your total taxable income, including buyback proceeds, stays within rebate thresholds:
- New regime: Full rebate available if total income ≤ Rs 12 lakh
- Old regime: Full rebate available if total income ≤ Rs 5 lakh
Under the old regime, tax efficiency improves further if you have capital gains to set off against capital losses triggered by the buyback.
5. Your purchase cost is not deductible
Under the new rules, the cost of your shares cannot be deducted from buyback income. Instead, it becomes a capital loss:
- Short-term capital loss (STCL) → Can be set off against both STCG and LTCG
- Long-term capital loss (LTCL) → Can be set off only against LTCG
Unadjusted losses can be carried forward for 8 years, provided the tax return is filed on time.
6. Prepare for TDS deduction
Infosys will deduct 10% TDS on buyback proceeds exceeding Rs 1,000.
Those in lower tax slabs may eventually receive refunds, but TDS will impact short-term liquidity.
7. Promoters are not participating
Promoters opting out slightly improves acceptance ratios for public shareholders. However, since the overall buyback size is small, full acceptance is unlikely for many investors.
A concern among long-term shareholders is the lack of grandfathering under the amended tax rules.
8. Check if you qualify as a “small shareholder”
If the value of your shareholding was Rs 2 lakh or less on the record date, you fall under the small shareholder category. This category receives a higher reserved quota, which typically improves acceptance chances.
Analyst Commentary
When Infosys announced its buyback, IT sector analysts viewed it as a strong signal of management’s confidence in the company’s long-term outlook. Despite a challenging year marked by valuation worries and muted demand, Infosys’ large cash reserves have enabled it to reward shareholders—suggesting that the current valuation remains compelling.
Over the past year, the company has faced softer discretionary tech spending, regulatory uncertainty in the US, and an industry-wide shift toward AI-driven transformation. These factors have dampened sentiment and contributed to fluctuations in the stock.
Even so, analysts maintain that Infosys’ fundamentals remain solid, supported by a healthy deal pipeline, strong cash flows, and a proven global delivery model. The buyback underscores management’s belief that the company is positioned for a recovery as technology spending stabilises and AI-led demand gathers momentum.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
November 20, 2025, 09:42 IST
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