Archive · 19 Nov 2025
Capital Market Industry Seeks Tax Reforms to Boost Liquidity
The capital market industry in India wants the government to change some tax rules.
They want lower taxes on buying and selling stocks, to make it cheaper for companies to give money back to shareholders, and to make taxes the same for Indian and foreign investors.
They also want more people to invest in the stock market.
Industry proposes comprehensive tax overhaul to boost liquidity and investor efficiency
Reduction in Securities Transaction Tax (STT) on cash market trades suggested
Reform in buyback taxation proposed to make capital return more efficient
Alignment of short-term dividend tax rates between domestic and NRI investors sought
Increase in retail ownership in equities proposed to around 8% over time
- Who
- India’s capital market industry representatives
- What
- Proposed tax overhaul and market reforms
- When
- During a pre-Budget meeting with Finance Minister Nirmala Sitharaman
- Where
- New Delhi
- Why
- To boost liquidity, investor efficiency, and household participation in equities
Market Participants
Government
Securities Transaction Tax (STT)
Market Participants
Reduce STT on equity cash trades to restore balance with derivatives and revive market depth
Government
Not specified in the article
Buyback Taxation
Market Participants
Apply tax only on the profit component of a buyback
Government
Not specified in the article
Short-Term Dividend Tax Rates
Market Participants
Align tax rates between domestic and NRI investors
Government
Not specified in the article
- Current Retail Ownership
- Around 5%
- Proposed Retail Ownership
- Around 8%
- Current STT Rate on Equity Cash Trades
- 0.10%
- Proposed STT Rate on Equity Cash Trades
- Meaningfully lower than derivatives
- Current Short-Term Dividend Tax Rate for NRIs
- 20%
- Current Short-Term Dividend Tax Rate for Domestic Investors
- Up to 42%
Sources
Industry seeks major overhaul in capital market taxes in pre-budget meet
Start-up sector pushes for tax incentives, capital access and stronger IP protection in pre-budget meeting with Finance Ministry
Pre-budget meeting: Capital market players seek tax sops, steps to deepen financial sector
FM Sitharaman meets startups and capital market leaders in pre-Budget consultations
Innovation, capital flows on agenda as Sitharaman meets industry leaders
NBFCs seek tax relief, refinancing window in pre-Budget meeting with FM Sitharaman
