Bajaj Auto Ltd announced on Monday that its ₹5,632.8 crore share buyback program will commence from July 1, 2026. According to the company's regulatory filing, the buyback involves repurchasing up to 46.94 lakh fully paid-up equity shares of face value ₹10 each at ₹12,000 per share, payable in cash. The program will remain open for participation until July 7, 2026, providing shareholders with a 12-day window to participate in the buyback. The buyback represents a premium of 26.31% and 26.53% to the volume weighted average market price on BSE and NSE respectively during the three months preceding April 30, 2026. The buyback is open only to shareholders who held Bajaj Auto shares as of the record date, with the actual benefit depending on the revised tax framework and the number of shares accepted under the offer.
From April 1, 2026, the tax treatment of listed company buybacks has undergone significant changes that will affect shareholders participating in Bajaj Auto's buyback. As explained by CA Chandni Anandan, Tax Expert at ClearTax, shareholders will no longer be taxed on the entire buyback amount. Instead, tax will be payable only on the actual capital gain, which is the difference between the buyback price and the purchase price of the shares. For example, if an investor purchased Bajaj Auto shares at ₹9,000 and tenders them at ₹12,000, the taxable capital gain would be ₹3,000, not the full buyback amount. Under the revised framework, if shares are held for more than 12 months, gains will be treated as long-term capital gains (LTCG) and taxed at 12.5%, with the first ₹1.25 lakh of total LTCG in a financial year remaining exempt. For shares held for 12 months or less, gains will be treated as short-term capital gains (STCG) and taxed at 20%, replacing the earlier deemed dividend regime that applied between October 1, 2024 and March 31, 2026. Since Bajaj Auto's buyback opened after April 1, 2026, shareholders whose shares are accepted under the offer will be taxed under the capital gains regime, differing from the deemed dividend framework that applied to listed company buybacks between October 1, 2024 and March 31, 2026.
The buyback proposal underwent a structured approval process before implementation. As reported by Business Standard, the company's board first approved the buyback on May 6, 2026, followed by shareholder approval through a special resolution via postal ballot notice on May 14, 2026. The results of the shareholder vote were officially announced on June 18, 2026, ensuring proper governance and stakeholder consultation before proceeding with the program. The buyback constitutes 16.93% and 15.59% of the aggregate of the fully paid-up equity share capital and free reserves of the company as per the latest audited standalone and consolidated financial statements as on March 31, 2026, respectively.
According to the company's regulatory filing, Bajaj Auto justified the buyback based on its strong business growth, robust cash generation, and solid balance sheet position. The company stated that these financial fundamentals enable it to reward shareholders while maintaining sufficient capital for future growth opportunities. The buyback is designed to reinforce shareholder commitment by returning surplus cash efficiently and is expected to improve earnings per share and return on equity. As per The Hindu BusinessLine, the company emphasized that this approach allows it to reward shareholders from time to time while retaining sufficient capital for growth and investment opportunities. The program will be conducted through the tender offer route and executed by S R B C & CO LLP, Chartered Accountants, with the last date of settlement of bids on July 14, 2026. Notably, the Promoters and Promoter Group have expressed their intention not to participate in the buyback, which will have implications for the company's public float and shareholder structure post-buyback.
While the ₹12,000 buyback price may appear attractive to shareholders, investors should remember that not all tendered shares may be accepted based on the total number of shares tendered compared with the company's repurchase intentions. As per the latest reports, shares that are not accepted will remain in the investor's demat account and can continue to be held or sold on the stock exchange. The actual amount received by shareholders will depend on two key factors: the number of shares accepted in the buyback and the capital gains tax payable under the revised tax rules. Under the current framework, the shareholder is responsible for paying tax on the buyback amount received, subject to applicable residential status and tax provisions, with the amount generally reported under 'Income from Other Sources'. Investors should retain the buyback offer letter, broker communication, payment advice and other supporting documents to correctly report the transaction while filing their Income Tax Return (ITR). This represents a significant change from the earlier deemed dividend regime that applied for buybacks paid between October 1, 2024 and March 31, 2026, making it crucial for investors to understand the new tax implications before participating in the buyback.
