Quick Summary
The Government has clarified that there is currently no proposal under consideration to abolish the Long-Term Capital Gains (LTCG) tax on equity investments for domestic or retail investors, despite recent concerns over differential tax treatment between foreign and Indian investors. The clarification came in response to an Unstarred Question raised in the Lok Sabha on July 20, 2026, seeking details on LTCG tax collections, the recent exemption granted to Foreign Portfolio Investors (FPIs), and
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FAQ :
No, the government has explicitly stated that there is currently no proposal under consideration to abolish the Long-Term Capital Gains (LTCG) tax on equity investments for domestic or retail investors.
The exemption for FPIs was specifically for investments in Government Securities (G-Secs) made on or after April 1, 2026. It was introduced to attract global capital, enhance India's competitiveness, and align its tax framework with international practices.
No, the exemption for FPIs is limited to investments in eligible Government Securities and does not apply to equity investments.
Domestic investors continue to be subject to the existing LTCG tax regime on equity investments, which includes a 12.5% tax rate.
Yes, the Finance Ministry noted that tax policies, including capital gains taxation, are subject to periodic review through the annual Budget process and legislative amendments, considering prevailing macroeconomic conditions.
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