Indian information technology companies sitting on large piles of cash could be among the biggest beneficiaries if market regulator SEBI brings back open market share buybacks through stock exchanges, a practice banned since April 2025.
The Securities and Exchange Board of India issued a consultation paper last week and is seeking public comments on the proposal until April 23. The review follows recent tax changes under which buyback proceeds are now taxed like normal share sales, removing the earlier tax advantage that made buybacks inequitable.
Under the proposed framework, buybacks would be conducted through a separate exchange window, with promoters barred from selling shares. Strict norms on pricing, volumes and disclosures would apply. Industry bodies such as FICCI have said exchange-based buybacks are globally preferred.
SEBI had earlier banned open market buybacks because companies paid a 20% buyback tax while investors received proceeds tax-free. Moreover, promoters were able to sell shares while companies bought them back thus artificially supporting prices. With the April 1 tax overhaul eliminating this inequality, the regulator believes the ban may no longer be justified.
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The possible return of open market share buybacks is seen as positive as it can help absorb selling pressure and act as a safeguard against panic selling. With recent tax changes removing earlier inequities in buyback taxation, the regulator believes the rationale for the ban no longer holds. The move is also viewed favourably for cash-rich companies like looking at more efficient capital return options.
For the IT sector, the impact could be significant as it stands out as the biggest beneficiary due to large cash reserves. Open market buybacks allow companies to repurchase shares whenever prices fall, offering continuous price support unlike one-time tender offers.
Cash On Books
Value in Rs crore
Major IT firms such as Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd. have collectively carried out over 15 buybacks since fiscal 2016 and together hold more than Rs 1 lakh crore in cash as of December 2025, making smaller and more frequent buybacks more feasible without going through a large tender process.
ALSO READ: Buyback Taxation Changes: Wipro Seen To Move First Among IT Majors After April 1
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