Infosys buyback: How non-resident shareholders will be taxed and when they can avail DTAA benefits

The ₹18,000 crore Infosys share buyback has opened, and there is a lot of confusion regarding the taxation of buyback proceeds among shareholders. We have addressed several such confusions in our previous articles (see the links below). While those articles focused on the taxation of buyback proceeds for resident shareholders, this article looks at how the buyback amount will be taxed in the hands of non-resident shareholders, based on inputs from "FAQ on Tax Deduction on Buyback" released by Infosys.

• Infosys buyback: Tax calculation and rules explained with a 500-share example
• Infosys buyback: How to save tax with capital loss adjustment in Income Tax Return
• Infosys share buyback: From income tax implications to eligibility, key things to consider
• Infosys share buyback: What investors should know about tax rules. Who can benefit?

Infosys buyback taxation for non-residents

The company is required to withhold taxes for non-resident shareholders at the rates in force on the buyback consideration as a dividend.

However, a non-resident shareholder may provide a Lower Tax Deduction Certificate (LTDC) issued by the Income Tax Department under Section 195, which authorises the company to deduct TDS at a lower rate instead of the standard prescribed rate under the Income Tax Act, 1961.

When will DTAA apply?

Under Section 90 of the Income Tax Act, non-resident shareholders can avail the provisions of the Double Tax Avoidance Agreement (DTAA), provided they satisfy conditions such as non-applicability of the General Anti-Avoidance Rule (GAAR), read with Multilateral Instrument (MLI), between India and the country of tax residence of the shareholders, if such DTAA has beneficial provisions with respect to buyback consideration, and shareholders fulfill all requirements of DTAA.

How to avail benefits under DTAA

According to the FAQ, benefits under the DTAA read with MLI can be availed by non-resident shareholders by providing the following documents:

a) Copy of the PAN card allotted by the Indian income tax authorities duly attested by the shareholders or details as prescribed under rule 37BC of the Income-tax Rules, 1962 in absence of PAN Card.

b) Copy of Tax Residency Certificate for financial year 2025-2026 obtained from the revenue or tax authorities of the country of tax residence, duly attested by shareholders/authorized signatory.

c) Electronic Form 10F (procured from the Income Tax e-filing portal). (Form 10F is only required if all the details (detailed below) required to be present in TRC are not available)

d) Self-declaration by the shareholders of having no permanent establishment in India in accordance with the applicable tax treaty.

e) Self-declaration of beneficial ownership by the non-resident shareholder

f) Self-declaration of fulfilling all conditions of tax treaty for being eligible to claim the benefit of DTAA read with MLI

g) Any other documents as prescribed under the IT Act for lower withholding of taxes, if applicable, duly attested by the shareholders

The non-resident shareholder is required to upload the above documents on the Infosys shareholders' portal till the last date of tendering of the offer. No documents will be considered after the last date of tendering of the offer.

What will the tax rate for non-residents?

Tax on payment of dividend, including buy back consideration to the non-resident shareholders, is deductible under section 196D in the case of Foreign Institutional Investors ('FII')/Foreign Portfolio Investors ('FPI') and Section 195 in case of others:

The tax rate for shares held by other non-residents (other than FII/FPI and ADR) under Section 195 of the Income Tax Act, 1961, are as follows:

Source: FAQs by Infosys

While the above rates are as per India's Income Tax Act, 1961, DTAA read with MLI provides a more beneficial rate if applicable.

The buyback programme will continue until November 26, 2025. During this period, the IT major will buy 10 crore fully paid-up equity shares at ₹1800 per share from eligible shareholders.