Infosys has launched the largest share buyback program in its history, worth ₹18,000 crore. Investors can tender their shares from November 20 to November 26. This buyback will offer benefits, better returns, and an opportunity for tax planning.
Infosys Share: IT sector giant Infosys has commenced the largest share buyback program in its history from November 20. Under this buyback, the company will repurchase its shares by spending a total of ₹18,000 crore. The objective of the buyback is to demonstrate the company's financial strength and benefit shareholders. This is a unique opportunity for investors, as eligible shareholders will get a chance to tender their shares at a fixed price, which could provide them with better returns compared to the market price.
Buyback Timeline
This Infosys share buyback will run from November 20 until 5 PM on November 26. Payments to investors participating in the buyback will be made by December 3. This process is open only to those shareholders who held Infosys shares in their demat accounts by November 14. This date has been termed the Record Date.
Under this, eligible shareholders can sell their shares to the company through a tender offer. KFin Technologies Limited is the registrar for this buyback, while Kotak Investment Banking is managing the entire transaction.
Key Details of the Buyback
Under this buyback, Infosys will repurchase up to 10 crore fully-paid shares with a face value of ₹5. The buyback price has been set at ₹1,800 per share. The company will complete this buyback using its available cash, and it will not significantly impact the company's financial position.
For small shareholders, the entitlement to tender has been set at 2 shares for every 11 shares held, while for other shareholders in the general category, eligibility has been determined at 17 shares for every 706 shares held. These conditions ensure that small investors can also benefit from this opportunity and that the process remains transparent for all shareholders.
Benefits of Participating in the Buyback
Experts suggest that participating in the buyback might be better for investors falling into lower tax brackets, as it would provide them with more liquidity. However, this option is not always advantageous for investors in higher tax brackets. For investors with an annual income exceeding ₹16 lakh, there is a greater possibility of saving tax by selling shares in the open market. The amount received from the buyback will be considered Dividend Income under the new tax rules and will be taxed according to individual tax slabs.
Capital Loss and Tax Set-off Facility
The cost of shares repurchased by Infosys will be considered a Capital Loss for shareholders. This loss will give them an opportunity to adjust it against their other Capital Gains. If Capital Gains are low in the current year and this loss is not fully adjusted, it can be carried forward for up to eight subsequent years and set off against future Capital Gains. Thus, the buyback not only provides immediate liquidity to investors but can also prove beneficial for tax planning purposes.
