TCS Buyback 2022: TCS Shares Buyback On March 9th, Offer, Price & News

Last month, we covered the initial details of TCS's buyback announcement. TCS has now announced that the buyback will be open between March 9th and March 23rd, 2022. Here are the details:

TCS Buyback Record Date

TCS had fixed 23 February 2022 as the record date for the buyback. Hence, if you had TCS shares in your DEMAT account on 21 February (ex-buyback date), you are eligible to participate in the buyback offer. 

TCS Buyback size

Tata Consultancy Services (TCS) had approved a proposal to buy back upto 4,00,00,000 Stocks for an amount not exceeding ₹18,000 crore.

TCS Buyback Premium

TCS shares closed at Rs 3,600 on Tuesday afternoon. Hence, the offer price of Rs 4,500 represents a premium of over 25% from today’s closing price. 

 TCS Buyback: Categories

TCS has announced two categories of investors and rules for them are different:

• Reserved category: Investors holding less than Rs 2 lakh worth of shares fall under the reserved category for small shareholders. Hence, investors holding less than 56 shares belong to this category. The ratio for the buyback is 1:7. It means - for every 7 shares your hold, TCS will buy back 1 share. For example, if you have 56 shares (max in this category) and you tender all of them, TCS will buy 8 shares at Rs 4,500.
• General category - Those holding more than 56 TCS shares as of record date will fall in this category. The company said 3,65,80,00,023 shares were held by other shareholders in the general category as on the record date. The ratio is 1:108 in this category. TCS will buyback 1 shares for every 108 tenders. 

Investors can bid for a higher number of shares as well. TCS will buy more shares from you if the overall quota of your category is not filled.

TCS buyback process: How to sell my shares at Rs 4,500?

On the company's request, the exchanges are going to provide a separate acquisition window to facilitate the placing of sell orders by eligible shareholders. Your broker will send you the buyback mail with the details. Keep looking for the mail and once you receive it, act according to the steps mentioned in the mail.

TCS buyback taxation: Will I have to pay taxes for shares sold?

The buyback offer letter states that income arising to the shareholder on account of buyback of shares as referred to in Section 115QA of the Income Tax Act is exempt from tax under the provisions of the amended section 10(34A) of the ITA with effect from July 5, 2019.

Also, the company is not required to deduct tax at source (TDS) on the consideration payable to resident shareholders pursuant to the buyback. However, TCS will have to pay a buyback tax of 20% on the distributed income. 

Should I sell my TCS shares as part of the buyback program?

Investors who had invested in the company with a long-term view should not tender their shares now. Even though the premium is decent, the company is expected to deliver good returns over the subsequent quarter. 

If you had invested for the short-term, it is a good opportunity to make a sizable size gain on your investment. Do your calculations and see how many shares you can sell and decide accordingly.