Wipro and Bajaj Auto announce share buybacks: Why are companies doing it now and what changed in Budget 2026?

In April, Wipro announced a share buyback of ₹15,000 crore. Shortly after, in May, Bajaj Auto announced a share buyback of ₹5,632 crore. Apart from these, other companies such as Aurobindo Pharma, Kajaria Ceramics and Cyient have also announced share buybacks in the last couple of months. In Budget 2026, Finance Minister Nirmala Sitharaman announced changes to the tax treatment for the share buyback gains. In this article, we will understand what the Budget 2026 announcement was and why companies are announcing share buybacks now.

Recent share buyback announcements

On 16 April 2026, Wipro announced a share buyback of ₹15,000 crore. The company will do the buyback for ₹250/share. The buyback price is approximately 20% premium to the market price on the day of the announcement. The company has proposed to buy back up to 60 crore shares, representing 5.7% of its total paid-up equity share capital.

On 6 May 2026, Bajaj Auto announced a share buyback of ₹5,633 crore. The buyback will be done for ₹12,000/share, a more than 15% premium to the market price on the day of the announcement. The company will buy back up to 46.94 lakh shares, representing around 1.68% of total equity.

Apart from Wipro and Bajaj Auto, some other companies have also announced share buybacks in April and May 2026. Most buyback announcements from companies have come after the Budget 2026 announcement.

Budget 2026: Change in treatment of buyback gains

In Budget 2026, Finance Minister Nirmala Sitharaman announced changes to the way buyback gains will be taxed. She mentioned that the consideration received by a shareholder in a share buyback will be charged to tax under the head ‘Capital Gains’.

Only the actual gains after deducting the purchase price, and not the entire amount received, will be taxed. A shareholder’s tax liability will depend on the shareholding period and the applicable capital gains tax rate as follows.

Short-term capital gains tax

If the shareholder has held the shares for 12 months or less before tendering them in a share buyback, the capital gains will be categorised as short-term capital gains (STCG). The short-term capital gains tax will be applied at 20%

Long-term capital gains tax

If the shareholder has held the shares for more than 12 months before tendering them in a share buyback, the capital gains will be categorised as long-term capital gains (LTCG). Long-term capital gains of up to ₹1,25,000 in a tax year are exempt from taxation. Incremental long-term capital gains are taxed at 12.5% without the indexation benefit.

A shareholder can use capital losses from other investments to offset capital gains from a share buyback by applying the set-off provisions. The remaining capital loss, if any, after applying set-off provisions, can be carried forward for the subsequent eight years.

Thus, by applying the capital gains provisions to the actual gains received, Budget 2026 has made participation in share buybacks taxpayer-friendly. The Budget 2026 provisions are applicable to share buybacks from 1 April 2026. As a result, some companies have announced share buybacks in April and May 2026.

There is a differential tax rate for promoters: 22% for promoters that are domestic companies and 30% for promoters other than domestic companies.

How were buyback proceeds taxed before 1 April?

Before 1 April 2026, the consideration received from a share buyback was taxed as a dividend. The entire amount, and not just the gain, was taxed as a dividend under the head ‘Income from Other Sources’ at the individual’s slab rate. The tax treatment made participation in share buybacks less attractive, specifically for shareholders in the higher tax slabs.

The Budget 2026 change of taxing buyback gains by applying capital gains tax provisions has made buybacks attractive again, compared to the earlier way of taxing them as dividends at the slab rate. Capital gains are taxed at a lower rate, benefiting individuals in higher tax slabs. Also, the capital losses can be used to offset capital gains.

Why do companies do share buybacks?

Share buybacks are one way to return money to shareholders in a tax-efficient manner. Some benefits of a share buyback include the following:

Improvement in EPS

When a company buys back its own shares, the shares bought are extinguished. With a lower equity base, Earnings Per Share (EPS) improves, even if the absolute profit stays the same.

Management signal to shareholders

With a share buyback, management indicates that the company’s shares are undervalued, which is why it is buying them back. The management sends a signal that it is confident about the company’s prospects and, hence, is doing the share buyback.

Support for the share price

A share buyback is usually done at a premium to the market price. In a volatile market, when the company buys its own shares at a premium to the market price, it provides some support to the share price.

Should you participate in a share buyback?

The decision to participate in a share buyback will depend on the period for which you plan to hold the shares. If you were planning to sell the shares anyway, you can participate in the share buyback and tender shares at a premium to the market price. The change in how buyback gains are taxed, by applying capital gains tax provisions, makes them more taxpayer-friendly.

Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached on LinkedIn.