Buyback tax plays spoilsport in Infosys offer

Infosys shareholders WILL have to shell out higher tax if they take up the IT services company’s buyback offer, especially if they are in the higher-income brackets. Under new taxation rules, the entire amount received will be taxable in the hands of shareholders as deemed dividend at marginal rates.

Infosys announced buyback price at Rs 1,800 apiece. It is at a premium of 16.6% over the September 19 closing price of Rs 1,544 on the BSE. Experts say for long-term investors, selling on the exchange and paying only capital gains tax may be more efficient than tendering shares in a buyback.