A key change in India's buyback taxation regime from April 1, 2026, is expected to revive shareholder payouts among IT majors — with Wipro emerging as the frontrunner, according to analysts. Until now, share buybacks were taxed as dividend income in the hands of investors, often attracting rates as high as 35% for those in the top tax bracket. The revised framework shifts buybacks under capital gains taxation, bringing the rate down to 12.5%, along with a flat 12% surcharge.
The rule change comes after a steep slowdown in buyback activity. Data shows that the number of buybacks plunged 79% in 2025 compared to the previous year, with just 10 announcements versus 47 in 2024. Notably, 2024 marked a rare year with virtually no buyback activity among major IT firms. Frequent changes in tax treatment over the past decade have played a significant role in shaping corporate payout strategies. With greater clarity now emerging, analysts expect companies — particularly large-cap IT firms with high payout ratios — to revisit buybacks as a preferred capital allocation tool.
Historically, companies like Tata Consultancy Services, Infosys, and Wipro have led the buyback wave, collectively returning tens of thousands of crores to shareholders over the past decade. Here's data from Prime database to show the quantum.
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Cash Piles Add to the Case
A key trigger for renewed buybacks is the sizeable cash reserves sitting on IT balance sheets. Wipro alone holds over Rs 57,000 crore in cash and equivalents, comparable to peers like Tata Consultancy Services and ahead of Infosys.
Despite muted revenue growth and ongoing business transitions, these companies continue to generate strong cash flows — strengthening the case for returning capital to shareholders.
Why Wipro May Lead the Charge
Among large-cap IT firms, analysts see Wipro as the most likely to announce a buyback soon after the new rules take effect. The company has one of the highest payout ratios in the sector and last executed a buyback in June 2023. With elevated cash levels and relatively subdued stock performance, a buyback could help support valuations while signalling confidence during a period of strategic reset.
While peers like Infosys and HCLTech may also consider similar moves, analysts suggest most firms could wait for further clarity on investor response before announcing plans.
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