Business · Economy · 2 hrs ago
India to consider changes to taxes on equity gains
India’s finance minister Nirmala Sitharaman says the government will consider reviewing taxes on equity gains.
Foreign investors have called for changes to long-term capital gains tax as they sell Indian shares.
SEBI has recommended removing that tax for foreign investors and offering relief to mutual fund investors who switch schemes.
SBI Research separately says the government could afford to abolish the tax, though it also suggests higher exemptions and lower rates for investments held longer.
India’s stock market has lagged other emerging markets, while foreign investors have withdrawn money and returns have weakened.
The proposals aim to make Indian equities more attractive and encourage investors to stay invested.
The recommendations are not binding, and the government has made no immediate commitment; it will decide whether to act.
SEBI has recommended removing long-term capital gains tax for foreign investors and offering tax relief to domestic mutual fund investors, according to people cited by Hindu BusinessLine.
The recommendations are non-binding, and the government will make the final decision.
Finance Minister Nirmala Sitharaman said the government would consider calls to review taxes on equity capital gains.
The proposals come as foreign investors have sold heavily and Indian equity markets have lagged emerging-market peers.
- Who
- SEBI made the recommendations, and Finance Minister Nirmala Sitharaman said the government would consider reviewing the taxes.
- What
- SEBI proposed removing long-term capital gains tax for foreign investors and exempting certain mutual fund switches from the tax.
- When
- The recommendations were reported on November 3, 2026, months before the annual federal budget in February.
- Where
- India.
- Why
- The proposals aim to attract foreign investment and encourage domestic mutual fund investors to remain invested.
This story does not have two clearly opposing sides.
SEBI held scores of meetings with foreign investors as selling persisted.
SBI Research first proposed abolishing long-term capital gains tax in an Ecowrap report.
Sitharaman said the government would consider requests to review taxes on equity capital gains.
Reports said SEBI had recommended tax changes, which are non-binding and require a government decision.
- Foreign investor proposal
- Remove long-term capital gains tax, according to people cited by Hindu BusinessLine.
- Mutual fund proposal
- Do not treat switches between schemes as taxable sales if units have been held for more than a year.
- Current long-term rate
- 12.5% on listed shares held for more than 12 months.
- Foreign stock sales
- About $31 billion in Indian stocks sold this year, according to Hindu BusinessLine.
- Mutual fund assets
- ₹82.6 lakh crore ($870.80 billion) in assets under management.
5 sources
India to Consider Equity Gains Tax Concerns, Sitharaman Says
Can India abolish LTCG tax? SBI Research says Centre has ‘fiscal headroom’ to absorb loss, suggests alternatives
We will consider the call for review of LTCG tax: Finance minister Nirmala Sitharaman
SEBI proposes scrapping LTCG tax on foreign investors, seeks relief for mutual fund investors
What people are saying
So, I'll consider all this... Our growth is very important, where people are putting their very best, we are able to see sustained 7(%)-plus growth.
Scrapping the long term and short term capital gains tax would be a clear positive, improving post tax returns and removing a longstanding friction in allocating capital to India
Correction of this anomaly will be welcomed by all investors