The Indian government has rejected suggestions to remove the Long-Term Capital Gains tax on equities. In a written reply to Parliament, officials confirmed that no changes to the current structure are being considered.
This statement ends recent market speculation. With retail investor numbers at record levels, some had expected a reduction or removal of the tax to support long-term holdings. Instead, the existing rules will continue without alteration.
Calls to end the equity LTCG tax grew after investors noted that retail participants face Securities Transaction Tax on trades plus the 12.5% levy on gains above ₹1.25 lakh when shares are held over 12 months.
The government cited two main reasons for its stance: revenue needs and fairness across asset classes. Capital gains tax supports public spending and infrastructure. Full exemption for equities could reduce collections significantly. Officials also aim to maintain similar treatment for gains from real estate, gold, and mutual funds, avoiding shifts that might disadvantage other sectors.
For most retail investors the impact stays limited. Annual profits up to ₹1.25 lakh remain exempt, so many small savers pay nothing. Larger investors and institutions will continue to account for the 12.5% rate in their planning, while household SIP flows continue to support market growth.
