The finance minister says investor views will be heard during Budget consultations, reviving speculation over relief on equity gains despite the government insisting that no abolition proposal is under consideration.
Finance Minister Nirmala Sitharaman has reopened debate over India’s long-term capital gains tax, saying the government is willing to hear investor views during the coming Budget consultations. The remarks have revived speculation that the levy on equities could be eased, or even removed, although the Finance Ministry has already said there is no proposal on the table to scrap it for retail and domestic investors.
That earlier clarification matters because the government has repeatedly drawn a line between listening to concerns and committing to change. In July, the Finance Ministry told Parliament that there was no current plan to abolish the tax on equity gains, even as it moved to soften the tax treatment of some foreign portfolio investment in government securities. Reuters reported that the exemption for certain overseas investors was designed to make India’s bond market more attractive to stable, long-term capital, not to alter the rules for equities.
The present debate is taking place against a backdrop of major changes to India’s capital gains regime. Since 23 July 2024, long-term gains on most assets have been taxed at a flat 12.5% without indexation, a change confirmed by the income tax department and explained in CBDT guidance. For real estate sold after the reform, the government said taxpayers in some cases can compare the new 12.5% system with the old 20% rate plus indexation and pay whichever is lower, while officials argued that the simplified structure would favour most long-term property owners.
For equity investors, the politics are different but the underlying issue is the same: whether the tax code should encourage longer holding periods. Stable Investor, the article that prompted the latest discussion, argued that if policymakers want to reward patience, they should consider either a much lower rate or a longer threshold before gains qualify as long term. The broader policy history points in one direction: India had no long-term capital gains tax on equities before 2018, introduced a 10% levy that year, and lifted it to 12.5% in 2024. That sequence has left investors debating whether the next change will be relief or another incremental tightening.
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