Changes in buyback taxation from April 1 are likely to push IT companies to rethink cash returns, with Wipro expected to be among the early movers.
A change in how share buybacks are taxed is quietly reshaping boardroom conversations, and Wipro may end up being one of the first large IT companies to act on it.
From April 1, the tax treatment of buybacks will move away from the earlier structure and shift closer to capital gains. The tweak may look technical on paper, but it changes the math for both companies and investors. Instead of being taxed on the full payout, shareholders are likely to be taxed only on the gains portion, making the route more efficient than before.
That shift is why buybacks are back in discussion. Over the past few years, several companies had slowed down on such payouts as the tax structure made them less attractive, especially for smaller investors. Dividends, in many cases, became the simpler route.
Now, the equation is changing again.
Market participants say Wipro, with its steady cash reserves and history of returning money to shareholders, is among the names being closely watched. There’s no official word yet, but expectations are building that the company could explore a buyback once the new rules are in place.
If that happens, it may not remain an isolated move. Peers like Infosys and TCS have also used buybacks in the past, and a favourable tax regime could bring them back into play.For investors, the return of buybacks could offer more than just payouts. Such moves often signal confidence from companies about their cash position and future outlook, something the market tends to reward.
The bigger question is timing. Companies are unlikely to rush, but once the first move happens, it could set off a broader trend across the sector.
