Infosys is set to launch India’s largest-ever share buyback on November 14, offering ₹1,800 per share while the market price hovers around ₹1,550. Zerodha co-founder Nithin Kamath took to X to demystify the tax implications for investors rushing to participate. The record date is November 14, meaning shareholders must hold the stock in their demat accounts by then to qualify. Kamath emphasized that Infosys remains one of the most widely held stocks in India, making this mega event a focal point for retail and institutional investors alike.

Kamath clarified that the payout from the buyback will be classified as “income from other sources” rather than dividend income. This means the entire amount received—₹1,800 per share tendered—will be added to the investor’s taxable income and taxed according to their applicable income tax slab. For those in the 30% bracket, this could significantly reduce the net gain compared to the current market price. The structure differs from typical dividends, which often come with dividend distribution tax already deducted at source.

A key advantage, Kamath pointed out, lies in the capital loss component. The original cost of acquiring the shares is treated as a capital loss in full, regardless of the buyback price. This loss can be set off against other capital gains in the same financial year or carried forward for up to eight years. Investors with substantial short-term or long-term gains elsewhere can thus reduce their overall tax liability, making the buyback strategically attractive despite the slab-rate taxation on proceeds.

Also Read: Sensex Soars 575 Points, Investors Gain ₹4 Lakh Crore in a Single Day

The nature of the capital loss depends on the holding period: shares held for less than one year generate short-term capital losses, while those held longer qualify as long-term. Kamath noted that without offsetting gains, the buyback effectively functions like a high-taxed dividend. He advised investors to assess their portfolio positions carefully before tendering shares, as the decision hinges on individual tax profiles and existing capital gains.

With the buyback window opening soon, investors have until the end of November 13 to purchase shares and be eligible for the record date. Kamath’s breakdown has sparked discussions across trading communities, with many recalculating potential returns. For high-net-worth individuals with capital gains to offset, the deal could yield tax-efficient liquidity; for others, it may simply be a costly payout in disguise.

Also Read: Tata Motors CV Listing Pays Off With 28% NSE Premium