Page 11 - Share Buybacks

Buybacks at all-time high of Rs 34,468 cr in 2016-17

Share buybacks by listed companies have hit a life-time high during FY17. A total of 45 companies launched share repurchase programmes this fiscal totaling Rs 34,468 crore. Interestingly, the amount is more than the combined buybacks in the preceding seven years.The new higher dividend tax regime and government increasingly opting for the buyback route for divestments are the two key reasons behind this sharp uptick in the buybacks during the current fiscal, market participants said.The government had introduced the concept of additional dividend tax (ADT) with effect from April 1, 2016. According to the new law, dividend received in excess of Rs 10 lakh was taxable at 10 per cent rate in the hands of recipients. Although dividend was already taxed in hands of the company through dividend distribution tax (DDT), ADT was introduced as an additional tax targeting companies and individuals who received significant amount of dividends. Hence India Inc. chose to go for buybacks instead of .