If your total taxable income (including the repurchase dividend) does not above the Rs 12 lakh level for the Section 87A rebate under the new tax system, tendering shares in a buyback is tax-efficient.
As the Rs 18,000-crore share repurchase window begins on Thursday, Infosys shares jump 3.5%: This is the reason why Infosys, the largest IT company in India, has opened the door for its largest-ever share repurchase, a Rs 18,000 crore program under the tender-offer method at a fixed price of Rs 1,800 per share. The premium is alluring to many stockholders.
However, it is important to understand the workings, tax ramifications, and subtleties hidden in the tiny print before you hastily submit your Infosys shares. Your choice should be based as much on your holding time and tax bracket as it is on the headline price because the buyback tax regulations have significantly altered.
Before you click the tender button, make sure you understand these important points.
1. Verify your eligibility
The only people who qualify are those who owned Infosys shares on November 14, 2025, the record date. You are unable to take part if you bought after this date. Additionally, keep in mind that Infosys is only repurchasing around 2.4% of its shares, which suggests that acceptance ratios may be low.
2. Understand the New Tax Rules
Infosys is offering a buyback at ₹1,800 per share, which comes with an attractive premium. But the real question is: how much will you take home after tax?
Under the new tax rules, buyback proceeds are treated as “income from other sources” and taxed at your applicable slab rate—not as capital gains. This is a major shift.
If you fall in the 30% tax bracket, the tax outgo can significantly reduce the premium you earn. Importantly, the entire buyback amount is taxable, not just the profit component.
Earlier, the company paid a 20% buyback tax (plus surcharge and cess), making buyback income tax-free for shareholders. That benefit has now been removed.
3. Compare It with Selling in the Open Market
Before tendering your shares, compare the tax impact with selling directly on the exchange:
Long-term capital gains (held > 12 months) are taxed at an effective 12.5% (including surcharge and cess).
Short-term capital gains are taxed at 20%, irrespective of your income slab.
Depending on your tax bracket, selling in the open market may be more tax-efficient than participating in the buyback.
4. Impact of Section 87A Rebate: Old vs New Regime
Tendering shares in the buyback becomes tax-efficient only if your total taxable income, including buyback income, stays within the Section 87A rebate limit.
Under the new tax regime:
If your income (including buyback proceeds) is up to ₹12 lakh, you can claim a full rebate, making your tax on the buyback effectively zero.
Under the old tax regime:
If your income does not exceed ₹5 lakh, you can claim the rebate on capital gains when selling shares in the market at special tax rates.
Additionally, tax efficiency improves if you have capital gains to set off against the capital loss generated from the cost of your shares.
5. Your Purchase Cost Is Not Deductible
One major change under the new rules is that your share purchase cost cannot be deducted from buyback income. Instead:
Your cost becomes a capital loss, which can be set off against capital gains.
Short-term capital loss (STCL) can be set off against both short-term and long-term gains.
Long-term capital loss (LTCL) can be set off only against long-term gains.
If losses remain unadjusted this year, they can be carried forward for eight years, provided you file your tax return on time.
6. Prepare for TDS Deductions
Infosys will deduct 10% TDS on buyback proceeds exceeding ₹1,000.
For investors in lower tax slabs, this often results in refunds later, which can temporarily impact liquidity. Make sure to account for this when planning cash flow.
7. Promoters Are Not Participating
Infosys’s promoters have opted out of the buyback. While this slightly improves the acceptance ratio for retail shareholders, it does not guarantee full acceptance, especially for those with larger holdings.
A notable concern among long-term investors is that the updated buyback tax rules offer no grandfathering, even for shares bought before the rule change.
8. Check Whether You Qualify as a “Small Shareholder”
If your holdings were ₹2 lakh or less on the record date, you fall under the small shareholder category.
This gives you access to a higher reserved quota, increasing your chances of receiving a larger portion of your tendered shares.
Infosys Buyback 2025 – Frequently Asked Questions (FAQ)
1. Who is eligible to participate in the Infosys buyback?
Only shareholders who held Infosys shares on the record date – November 14, 2025 – are eligible. If you purchased shares after this date, you cannot participate.
2. What is the size and price of the Infosys buyback?
Infosys is conducting its largest-ever buyback worth ₹18,000 crore at a fixed price of ₹1,800 per share under the tender-offer method.
3. Why did Infosys shares jump 3.5% before the buyback window opened?
The share price rose due to strong investor interest in the premium offered and the announcement of the ₹18,000-crore repurchase program.
4. Are acceptance ratios expected to be high?
Not necessarily. Infosys is repurchasing only 2.4% of its total shares, so acceptance ratios may be low, especially for large holdings.
5. How are buyback proceeds taxed under the new tax rules?
Under the new rules, buyback proceeds are treated as “income from other sources” and taxed at your income-tax slab rate, not under capital gains.
Entire buyback amount is taxable
If you’re in the 30% slab, a significant portion of the premium may be lost to tax
Earlier, buyback income was tax-free because the company paid buyback tax—this benefit is no longer available
6. Is tendering shares still tax-efficient?
Tendering is tax-efficient only if your total taxable income (including buyback income) stays within the ₹12 lakh Section 87A rebate limit under the new regime.
If your income is within this limit, you can claim a full tax rebate.
7. What about the tax benefits under the old tax regime?
Under the old regime, you can claim the Section 87A rebate if your income does not exceed ₹5 lakh, which can make selling in the open market more attractive for some investors.
8. Should I compare buyback taxation with selling on the open market?
Yes. Selling on the exchange may be more tax-efficient depending on your holding period:
Long-term capital gains (>12 months): taxed at 12.5%
Short-term capital gains: taxed at 20%, irrespective of slab
Compare both options before making a decision.
9. Can I deduct my share purchase cost from buyback income?
No. Under the new rules, your purchase cost is NOT deductible from buyback income.
However, it becomes a capital loss, which can be set off against capital gains:
STCL: can be adjusted against both short-term and long-term gains
LTCL: can be adjusted only against long-term gains
Unused losses can be carried forward for 8 years
10. Will there be TDS deducted by Infosys?
Yes. Infosys will deduct 10% TDS on buyback proceeds above ₹1,000.
If you fall in a lower tax slab, this may result in a refund later, temporarily affecting liquidity.
11. Are Infosys promoters participating in the buyback?
No. Promoters have chosen not to tender their shares, which may slightly improve acceptance ratios for public shareholders.
However, there is no guarantee of full acceptance, and the new tax rules offer no grandfathering for older share purchases.
12. Who qualifies as a “small shareholder”?
If your Infosys holdings were ₹2 lakh or less on the record date, you are considered a small shareholder.
This category has a higher reserved quota, giving you improved chances of higher acceptance.
13. Is the buyback a good option for all investors?
Not necessarily.
It depends on:
Your tax slab
Whether you qualify for Section 87A rebate
Your holding period
Possible acceptance ratio
Whether selling on the market gives you better post-tax returns
Evaluate both tax outcomes before tendering shares.
