In India, a notable shift in shareholder rewards is observed as companies favor buybacks over dividends, driven by tax advantages. Rahul Bhutoria, Director of Valtrust, notes the tax treatment disparity: buybacks face a flat 23.296% tax, while dividends incur a 37% tax for shareholders.
High-tax bracket investors find buybacks more beneficial, offering nearly 45% higher post-tax returns. This trend extends beyond large caps to small and mid-cap companies, embracing buybacks for tax efficiency.
Smaller players, once constrained, now view it as a strategic tool to enhance shareholder value, reflecting a changing landscape in how companies navigate tax considerations.