Impending Tax Changes Drive Buyback Rush

Companies are accelerating their share buyback plans due to upcoming tax changes set to take effect in October. Currently, companies incur a 20% tax on buybacks, making it financially advantageous for them to complete these transactions before the tax burden shifts to shareholders. Following the new rules, buyback proceeds will be considered dividend income, subjecting shareholders to individual tax rates, which can significantly affect their returns. As a result, companies are eager to finalize buybacks soon, particularly to avoid imposing higher taxes on major shareholders, such as promoters and institutional investors, who often fall within the higher tax brackets.