Quick Summary
From April 1, 2026, Foreign Institutional Investors (FIIs) in India will see their Long-Term Capital Gains (LTCG) tax rate on securities increase from 10% to 12.5%. This change, introduced by the Union Budget 2025, aims to create a more uniform tax structure and align FII tax liabilities with those of resident investors. The new rate applies to assessment year 2026-27 onwards, promoting fairness and potentially encouraging investment through a clearer tax framework.

Long-Term Capital Gains refer to the profits earned from selling assets or investments held for more than a specified period, typically over one year. The exact holding period can vary depending on the type of asset: Equities and Mutual Funds: Held for more than 12 months. Real Estate and
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The new LTCG tax rate for FIIs will take effect from April 1, 2026, applying to assessment year 2026-27 and subsequent years.

The new LTCG tax rate for FIIs on the transfer of securities will be 12.5%.

The previous LTCG tax rate for FIIs on securities not covered under Section 112A was 10%.

The change aims to bring parity in taxation between residents and non-residents, creating a more consistent tax structure across various types of securities.

Yes, the new 12.5% rate will apply to all securities, including those not covered under Section 112A, from April 1, 2026.




About the Author

Finance Professional

I write on Income Tax, TDS, ITR filing, banking rules, investment schemes, and financial law updates in India. My articles simplify complex tax provisions, compliance requirements, and policy changes to help taxpayers, professionals, senior citizens, and businesses stay informed and financially aware.


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