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Tax shift throws a wrench in the gears of buyback offers in 2024

In 2024, 48 companies repurchased shares worth Rs 13,423 crore, compared to Rs 48,079 crore spent on share buybacks by the same number of companies in 2023

The recent decline in corporate earnings is likely to cast a shadow on the government’s direct-tax receipts and its fiscal position.
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The central government’s move to tax share buybacks at the shareholder level, similar to dividends, discouraged companies from pursuing buyback offers. (File Image)

Sundar Sethuraman Mumbai

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After reaching a six-year peak in 2023, the amount spent on buyback offers by companies shrank last year following the government’s decision to shift the tax burden from companies to investors.
 
In 2024, 48 companies repurchased shares worth Rs 13,423 crore, compared to Rs 48,079 crore spent on share buybacks by the same number of companies in 2023.
 
The central government’s move to tax share buybacks at the shareholder level, similar to dividends, discouraged companies from pursuing buyback offers. Robust equity markets, which reduced investor willingness to tender shares, also contributed to the decline in share repurchases.
 
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