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The buyback rush

Firms may not be optimistic about growth prospects

TCS, Tata consultancy service

Buybacks are in vogue due to a change in the tax laws. The dividend distribution tax, which had to be paid by the company, has been abolished.  All companies now have to pay a tax on “income distributed” by the medium of buybacks, whereas only unlisted companies were liable to pay the “buyback tax” earlier. From 2020-21, the shareholder also has to pay income tax on dividends received. On the other hand, the shareholder, who accepts a buyback offer, is no longer liable to pay capital gains tax on the associated profits. Consequent to these changes, buybacks ...