It's raining buybacks on bourses

Eleven companies have collectively repurchased shares worth ₹5,388 crore in August.

- DEEPAK KORGAONKAR & PUNEET WADHWA

The value of shares bought back is the highest in 8 months, according to data from PRIME Database.

Analysts attribute the sharp rise to changes in India's share buyback tax regime from October 1. New rules announced in the Union Budget presented in July 2024 will shift the tax burden from companies to shareholders, altering the landscape for buyback strategies. Companies undertaking a buyback now have to pay effectively over 20 per cent as buyback tax.

Shareholders tendering their shares do not attract any tax.

Under the new structure, to be unveiled from October, the amount received on buyback of shares would be taxed as dividends in the hands of investors as per their tax slabs.

The cost of acquiring shares tendered in a buyback will be considered as capital loss, which will be eligible for setoff against other capital gains.