The government has clarified that there is no proposal under consideration to scrap the Long-Term Capital Gains (LTCG) tax on equity investments. In a written reply in Parliament, the Finance Ministry said there is currently no such proposal and added that capital gains tax policies are reviewed periodically during the annual Budget process and legislative revisions after considering macroeconomic parameters.
The Finance Ministry said it collected around ₹2.01 lakh crore through LTCG tax on equities during FY 2023-24 and FY 2024-25. The figures are reported on an assessment year basis, with AY 2024-25 corresponding to income earned in FY 2023-24 and AY 2025-26 relating to income earned in FY 2024-25.
According to earlier data shared by the ministry, LTCG tax revenue from equity transactions increased to ₹1.29 lakh crore in AY 2025-26 from ₹72,249 crore in AY 2024-25. This represents an increase of ₹56,909 crore, or nearly 79%, between the two assessment years.
Under the current tax regime, long-term capital gains on eligible equity assets are taxed at 12.5% without indexation. The revised tax rate came into effect for transfers made on or after July 23, 2024, following changes announced in the Union Budget 2024. The LTCG collections for AY 2025-26 reflect income earned during FY 2024-25, when the revised provisions were introduced.
Minister of State for Finance Pankaj Chaudhary said the 12.5% LTCG tax rate for domestic and retail investors is the same as that applicable to Foreign Portfolio Investors (FPIs) for equity investments. He also clarified that the recent tax rationalisation applies only to FPI investments in government securities. The exemption, effective April 1, 2026, is aimed at aligning India’s taxation of government securities with comparable jurisdictions and attracting stable, long-term foreign capital from pension funds, insurers, and sovereign wealth funds.
Meanwhile, FPIs have sold about $28.03 billion worth of Indian equities so far in 2026, as elevated crude prices and the rupee’s slide to record lows weighed on sentiment. However, overseas investors have bought $1.25 billion of Indian shares in July so far. India’s Nifty 50 has declined about 7.2% in 2026, underperforming other emerging market and Asian peers despite sustained buying by domestic investors.
India Retains 12.5% Equity Tax, Formalizes FPI Bond Relief
India’s Monsoon Session began with the introduction of the Income-tax (Amendment) Bill, 2026, which seeks to replace the June ordinance that exempted foreign portfolio investors (FPIs) from paying tax on investments in government bonds. The bill aims to make the tax relief permanent and attract more stable foreign capital into India.
The Finance Ministry said there is no proposal to offer similar tax benefits to domestic equity investors. It also confirmed that the 12.5% capital gains tax on domestic equities will remain unchanged. The government said the move is intended to support foreign investment amid rupee weakness, high oil prices, and ongoing global supply chain challenges.
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