'Beyond my imagination': Investment pro warns of tax trap for investors in Infosys buyback
“Buyback consideration will be treated as dividend, and company will deduct TDS at 10% on the full consideration,” Sivaram explained. That means if an investor tenders 100 shares at ₹2,000 each, Infosys will withhold ₹20,000 in tax upfront.
- Sep 12, 2025,
- Updated Sep 12, 2025 2:48 PM IST
Infosys has announced a ₹18,000 crore share buyback, its biggest yet but a LinkedIn post by Enam Holdings’ investment director Sridhar Sivaram warns the new post-October 2024 taxation rules could turn this bonanza into a compliance headache.
Under the new regime effective October 1, 2024, buyback proceeds will be treated as dividends, not capital gains—a major shift.
“Buyback consideration will be treated as dividend, and company will deduct TDS at 10% on the full consideration,” Sivaram explained. That means if an investor tenders 100 shares at ₹2,000 each, Infosys will withhold ₹20,000 in tax upfront.
Worse, the entire sale value is taxed at the investor’s marginal slab. “Even as a CA, I get confused,” Sivaram admitted. The only relief: the cost of acquisition becomes a capital loss—usable against other capital gains, but not to reduce the dividend tax itself.
A user broke it down: if an investor receives ₹100 per share and is taxed at 35%, their post-tax amount drops to ₹65. Including capital loss tax savings (at, say, 12.5%), the benefit rises to ₹77.50. But if the investor instead sells on the open market with a long-term gain (assuming a 50% cost basis), they could net ₹93.75 after taxes. Their conclusion: unless the buyback premium is at least 21% above current market price, large investors may walk away.
Infosys is offering ₹1,800 per share—a 19% premium over the current market rate. That may not be enough. “Why would anyone want such a complicated buyback taxation!! Beyond my imagination!!” Sivaram wrote.
Adding to investor woes: SEBI’s ban on secondary market buybacks. Sivaram noted that U.S. companies are projected to repurchase nearly $1 trillion in 2025, mostly through secondary markets. “I have made many representations… but of no use!!”.
Small investors may still benefit — those taxed below 10% could net ₹90 or more per share—but face liquidity drag from the 10% TDS. Unless reversed, the new system could depress participation and force companies to hike premiums just to make buybacks attractive.
Infosys buyback 2025, Sridhar Sivaram LinkedIn, new buyback tax rules, SEBI buyback ban, post October 2024 dividend tax
Infosys has announced a ₹18,000 crore share buyback, its biggest yet but a LinkedIn post by Enam Holdings’ investment director Sridhar Sivaram warns the new post-October 2024 taxation rules could turn this bonanza into a compliance headache.
Under the new regime effective October 1, 2024, buyback proceeds will be treated as dividends, not capital gains—a major shift.
“Buyback consideration will be treated as dividend, and company will deduct TDS at 10% on the full consideration,” Sivaram explained. That means if an investor tenders 100 shares at ₹2,000 each, Infosys will withhold ₹20,000 in tax upfront.
Worse, the entire sale value is taxed at the investor’s marginal slab. “Even as a CA, I get confused,” Sivaram admitted. The only relief: the cost of acquisition becomes a capital loss—usable against other capital gains, but not to reduce the dividend tax itself.
A user broke it down: if an investor receives ₹100 per share and is taxed at 35%, their post-tax amount drops to ₹65. Including capital loss tax savings (at, say, 12.5%), the benefit rises to ₹77.50. But if the investor instead sells on the open market with a long-term gain (assuming a 50% cost basis), they could net ₹93.75 after taxes. Their conclusion: unless the buyback premium is at least 21% above current market price, large investors may walk away.
Infosys is offering ₹1,800 per share—a 19% premium over the current market rate. That may not be enough. “Why would anyone want such a complicated buyback taxation!! Beyond my imagination!!” Sivaram wrote.
Adding to investor woes: SEBI’s ban on secondary market buybacks. Sivaram noted that U.S. companies are projected to repurchase nearly $1 trillion in 2025, mostly through secondary markets. “I have made many representations… but of no use!!”.
Small investors may still benefit — those taxed below 10% could net ₹90 or more per share—but face liquidity drag from the 10% TDS. Unless reversed, the new system could depress participation and force companies to hike premiums just to make buybacks attractive.
Infosys buyback 2025, Sridhar Sivaram LinkedIn, new buyback tax rules, SEBI buyback ban, post October 2024 dividend tax