Business & FinanceTop StoryTop StoryLatest News
Equity LTCG Tax Evolution in India: A Timeline of Policy Shifts Since 2003
Sentiment: NeutralHigh Priority
What Happened?
The Securities and Exchange Board of India has recommended scrapping the long-term capital gains tax on equity investments by foreign portfolio investors. This proposal comes amid concerns over foreign investor outflows and tax burdens.
Key points
- Sebi has proposed scrapping LTCG tax for foreign portfolio investors.
- Tax relief is suggested for domestic mutual fund investors switching schemes.
- LTCG tax was abolished in 2004, reintroduced in 2018, and increased in 2024.
- The current LTCG tax rate is 12.5% for gains exceeding ₹1.25 lakh.
- The government has not yet accepted Sebi's recommendations.
Key insights
- If accepted, the removal of LTCG tax for foreign investors may attract more foreign capital.
- Domestic investors could benefit from tax relief when switching mutual fund schemes.
- The ongoing debate reflects broader concerns about the attractiveness of Indian equity markets.
Why it matters
The proposed changes could significantly impact foreign investment in Indian equity markets.
Source
Business Standard
