IT index rises up to 4% from day's low after buyback tax revision in Budget 2026; Wipro, TCS rise up to 3%

IT shares rise in trade.

• IT index rose 4% after buyback tax changes in Union Budget 2026.
• Buyback proceeds taxed as capital gains, benefiting IT majors TCS and Wipro.
• Nifty IT and consumer durables were the only sectoral indices in the green.

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The IT index recovered sharply on February 1, rising up to 4 percent from the day’s low after the Union Budget 2026 proposed changes to the taxation of share buybacks.

Nifty IT and consumer durables were the only sectoral indices trading in the green among the 16 major sectors, while the broader market remained under pressure. The benchmark Nifty slipped over 1 percent.

The rebound in IT shares came after the Finance Minister announced that proceeds from share buybacks would be taxed as capital gains instead of being treated as income. In recent years, IT companies have been among the largest users of buybacks to return cash to shareholders.

Shares of Wipro rose as much as 3.6 percent, while Tata Consultancy Services advanced up to 3 percent, emerging as the top gainers in the IT pack.

"This change is a big positive for Indian IT majors like TCS, Infosys and Wipro because it brings back a tax-efficient way to reward shareholders. These cash-rich companies have long relied on buybacks to return surplus capital," Kranthi Bathini, director of equity strategy at WealthMills Securities, said.

The Nifty IT index was flat in January, while the benchmark Nifty declined 3.1 percent during the same period.

"At the margin, another positive for investors is the change in buyback taxation, where gains for minority shareholders will now be treated more like capital gains rather than regular income. This addresses a long-standing investor concern and is incrementally market-friendly," said N ArunaGiri, CEO of TrustLine Holdings.

Under the proposal, buyback proceeds will be taxed as capital gains for all shareholders, ensuring that tax is levied only on the actual economic gain. The move aligns the taxation of buybacks with that of regular share sales and removes the anomaly faced by non-promoter investors.

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