📘 What is a Buyback of Shares?
A buyback (also called a share repurchase) is when a company buys back its own shares from existing shareholders.
This helps:
- Return surplus cash to shareholders
- Improve earnings per share (EPS)
- Strengthen return ratios
- Increase promoter holding percentage by reducing total outstanding shares
A buyback often signals confidence in the company’s fundamentals and cash position.
💰 Infosys Buyback 2025 – Basic Details
| Particular | Details |
|---|---|
| Company | Infosys Limited |
| Type | Tender Offer (via Stock Exchanges – NSE / BSE) |
| Buyback Size | ₹ 18,000 crore |
| Buyback Price | ₹ 1,800 per share |
| Face Value | ₹ 5 per share |
| Total Shares to be Bought Back | 10 crore shares |
| % of Total Equity | 2.41% of paid-up capital |
| Promoters’ Participation | Promoters have opted not to participate |
| Mode of Payment | Cash |
| Manager to Buyback | Kotak Mahindra Capital Company Ltd |
| Registrar to Buyback | KFin Technologies Ltd |
🗓️ Tentative Timeline (Indicative Schedule)
| Activity | Tentative Date |
|---|---|
| Board Approval | September 11, 2025 |
| Shareholder Approval via Postal Ballot | Sept – Oct 2025 |
| Record Date | Around Nov 14, 2025 |
| Dispatch of Letter of Offer | Within 2 working days of Record Date |
| Buyback Opens | Likely in Late Nov 2025 |
| Buyback Closes | Within 5 working days of opening |
| Payment to Shareholders | Within 7 working days of closure |
| Extinguishment of Shares | Within 15 days of closure |
(Final dates to be confirmed in the public announcement and SEBI filings.)
👥 Eligibility for Retail Investors
According to SEBI Buyback Regulations, a retail investor is one who:
- Holds shares worth ≤ ₹ 2 lakh (based on market value on the record date).
✅ 15% of the total buyback shares are reserved for retail shareholders.
This ensures smaller investors have a higher probability of acceptance.
⚖️ Regulatory Framework & Process
- Mode: Buyback through the stock-exchange tender route (BSE / NSE).
- Funding: Out of Infosys’s free reserves / securities premium – no borrowings.
- Proportionate Acceptance: Shares accepted based on the entitlement ratio announced post record date.
- Voluntary Participation: Shareholders can choose to tender or hold their shares.
- SEBI Cap: Buyback cannot exceed 25% of paid-up capital and free reserves.
💡 Taxation on Buyback (Updated After 1 October 2024)
🆕 New Regime – Applicable for Buybacks on or after 1 October 2024
Under the Finance (No. 2) Act 2024, the tax treatment of buybacks has changed significantly.
| Aspect | Old Regime (before 1 Oct 2024) | New Regime (after 1 Oct 2024) |
|---|---|---|
| Who pays tax | Company paid 20% Buyback Distribution Tax u/s 115QA | Shareholder pays tax on amount received |
| Nature of income | Exempt in shareholder’s hands (u/s 10(34A)) | Deemed Dividend u/s 2(22)(f) |
| Tax rate | Company paid ~23% incl. surcharge/cess | Taxed at individual’s slab rate as “Income from Other Sources” |
| TDS by company | No TDS (since company paid tax) | Yes – 10% for residents; 20% (for NRIs or as per treaty) |
| Cost of acquisition | Irrelevant for tax calculation | Not deductible from dividend income; becomes a capital loss |
| Capital Loss Set-off | Not applicable | Capital loss can be set off against future capital gains |
🔹 For Retail Investors:
The entire buyback consideration is taxable as dividend income at your applicable slab rate.
Your original cost of shares will be treated as a capital loss that you can carry forward for future set-off (against capital gains).
🔹 For Non-Resident Shareholders:
Tax is withheld by Infosys at 20% or lower DTAA rate (as per treaty).
They can claim credit or refund in their home jurisdiction.
⚠️ Hence, unlike previous years where buyback income was tax-free for investors, the 2025 Infosys Buyback will be taxable in the hands of shareholders.
🧮 Example of Entitlement & Tax Impact
Suppose you hold 100 Infosys shares on Record Date:
- Entitlement ratio (illustrative): 3 shares for every 100 held
- If you tender all 100 shares at ₹ 1,800:
- 3 shares are guaranteed for acceptance
- Accepted amount = ₹ 5,400 (3 × 1,800)
- Taxable as dividend income ₹ 5,400 at your slab rate
- Original cost of 3 shares = say ₹ 3,000 → book capital loss of ₹ 3,000 to set off later
📢 Key Points for Investors
✅ Buyback period remains open for 5 working days only.
✅ Check your eligibility and entitlement on KFintech’s portal after Record Date.
✅ Ensure your bank and demat details are updated for payment.
✅ Unaccepted shares return automatically to your demat account.
✅ Consider post-tax returns when deciding to participate.
🧭 Why Infosys Is Doing This Buyback
Infosys has a strong balance sheet with robust cash flows.
The buyback aligns with its capital allocation policy to:
- Reward shareholders through cash returns
- Enhance EPS and return ratios
- Optimize capital structure
🧾 Quick Summary for Investors
- Buyback Size: ₹ 18,000 crore @ ₹ 1,800 per share
- Record Date: ~ November 14, 2025
- Tax: Taxable as dividend in shareholder’s hands (post-Oct 2024 rule)
- Mode: Tender Offer on NSE/BSE
- Retail Entitlement: 15% reservation
🧠 Final Thought
The Infosys Buyback 2025 remains an opportunity for shareholders to unlock value — but with a changed tax treatment.
For most retail investors, the gain is no longer tax-free; plan accordingly and consult your tax advisor to optimize the outcome.
