Company: INFY
Filing Date: 2025-07-01
Form Type: 20-F
Source: 0000950170-25-091925
Chunk: 194

Company: Infosys Ltd
Filing Date: 2025-07-01
Form: 20-F
Item: Item 10
Chunk 194
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 could get reconverted into ADS. As far as taxability of such reconversion is concerned, there are two possible views i.e., whether such reconversion of shares into ADS is a taxable transfer and accordingly would attract capital gains tax or such reconversion of shares into ADS is non-taxable transfer and would not attract capital gains. While there are arguments supporting both the views, the view that such reconversion is not a taxable transfer may be construed to be a better view.

B.Income tax implications in respect of sale of equity shares on account of buyback, pursuant to conversion of ADS into equity shares:

(i)Prior to October 1, 2024, all domestic companies are subject to tax on the buyback of shares under section 115QA of the Income tax Act at the rate of 23.296% (including surcharge of 12% and health and education cess of 4%).
(ii)As a result of above tax on buyback of shares, an income tax exemption to shareholders under section 10(34A) of the Income Tax Act, is provided.
(iii)The statutory obligation of the non-resident shareholder to pay tax dues on gains (if any) in the country in which they are tax resident is a separate and independent from the statutory obligation of the Company to taxes on buyback. Shareholders should consult his, her or its own tax advisor regarding the tax treatment or tax obligation, if any.

However, as per Finance (No. 2) Act 2024, the provision of section 115QA of the Income Tax Act shall not be applicable in respect of any buy-back of shares that takes place on or after October 1, 2024 and accordingly the exemption to shareholders under section 10(34A) of the Income tax Act will also not be available. Any consideration received by the shareholders on account of buy-back of shares on or after October 1, 2024 shall be taxable as dividend income under the head of ‘Income from other sources’ and such amount will be liable to withholding of tax at the applicable rates prescribed under Income Tax Act read along with Tax treaty with respective countries (together with MLI as applicable) subject to providing various Tax forms including Tax Residency certificate and electronic Form 10F by non-resident shareholders. For the purposes of computing the capital gain in the hands of shareholders with respect to the shares bought back, consideration received shall be deemed to be NIL in accordance with section 46A of the Income Tax Act, thereby