SEBI proposes to enable share buybacks through stock exchanges

Securities and Exchange Board of India (SEBI) proposed to enable buy back of shares and other such securities through stock exchanges, according to a consultation paper released 2, April 2026.

“It is proposed that the buy-back of shares or other specified securities from open market through stock exchange may be re-introduced as an additional method in terms of Regulation 4(iv) of Buy-Back Regulations. The existing framework as provided in Regulations and Circulars issued thereunder with respect to buy-back from open market through stock exchange would be applicable,” SEBI proposed in the paper. 

Buy back is the act of a listed company buying its own outstanding shares , reducing the number of shares in the public. This can be done through book building process or through stock exchanges, however the latter route was discontinued from 1 April 2025, owing to differential tax treatment and possibility that the entire purchase order of the company could get matched with the sale order placed by one or very few shareholders, depriving other interested shareholders of the equitable opportunity. 

The tax treatment was changed to tax proceeds from buy back as dividend, hence making it incidental on shareholders. Further, FICCI and Investment Bankers association had represented to the markets regulator that buy back through stock exchange was an internationally recognised and was efficient and it be re-introduced. 

Accordingly, the market regulator published the proposal and has put it out for public consultation. The paper is open for stakeholder feedback until 23, April 2026.