Wipro and Bajaj Auto Initiate Share Buybacks Following Budget 2026 Tax Reforms
Wipro and Bajaj Auto announce share buybacks: Why are companies doing it now and what changed in Budget 2026?
Mint
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In April and May 2026, Wipro and Bajaj Auto announced share buybacks worth ₹15,000 crore and ₹5,632 crore, respectively. The recent Budget 2026 introduced favorable tax treatment for buyback gains, shifting from dividend taxation to capital gains, making buybacks more attractive for companies and shareholders alike.
- 01Wipro's buyback is priced at ₹250 per share, a 20% premium to the market price, while Bajaj Auto's buyback is at ₹12,000 per share, over 15% premium.
- 02The Budget 2026 change allows only actual gains to be taxed under capital gains, benefiting shareholders with lower tax rates.
- 03Short-term capital gains tax is set at 20% for shares held for 12 months or less, while long-term gains over ₹1,25,000 are taxed at 12.5%.
- 04Before April 2026, buyback gains were taxed as dividends, making them less appealing, especially for higher tax bracket shareholders.
- 05Share buybacks are seen as a signal of management confidence in the company's value and help improve earnings per share (EPS).
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Wipro and Bajaj Auto have recently announced substantial share buybacks of ₹15,000 crore and ₹5,632 crore, respectively, following the introduction of favorable tax provisions in Budget 2026. The Finance Minister, Nirmala Sitharaman, announced that gains from share buybacks will now be taxed under capital gains rather than as dividends, which previously taxed the entire amount received. This change, effective from April 1, 2026, allows shareholders to benefit from lower tax rates, with short-term gains taxed at 20% and long-term gains over ₹1,25,000 taxed at 12.5%. The shift aims to enhance the attractiveness of share buybacks, particularly for those in higher tax brackets. Companies often engage in buybacks to return capital to shareholders, improve earnings per share (EPS), and signal confidence in their stock value. The buybacks are typically conducted at a premium to market prices, providing additional support to share prices during market volatility. As a result, more companies are expected to pursue buybacks as a strategic financial maneuver.
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The tax reforms in Budget 2026 are expected to encourage more companies to initiate share buybacks, benefiting shareholders through lower tax liabilities and potentially increasing share prices.
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