Nirmala Sitharaman Remains Non-Committal on LTCG Tax Changes Ahead of Budget 2026
Finance Minister Nirmala Sitharaman refrains from confirming potential changes to long-term capital gains tax as preparations for the Union Budget 2026 commence.
Sitharaman states it's too early to discuss LTCG and STT changes.
SBI Research recommends abolishing LTCG tax on equities to attract long-term investments.
Foreign investors withdrew Rs 3.04 lakh crore from Indian equities in 2026.
In a recent address at the Bloomberg New Economy Forum 2026, Union Finance Minister Nirmala Sitharaman declined to commit to any changes regarding the long-term capital gains (LTCG) tax or securities transaction tax (STT). She emphasized that discussions on taxation are ongoing, but it is premature to make any declarations as the government prepares for the upcoming Union Budget.
Sitharaman's comments come in the wake of a report from SBI Research, which has suggested that the government should consider abolishing the LTCG tax on equity investments. The report argues that removing this tax could stimulate longer-term investments and stabilize foreign capital flows into the Indian market. It also proposes extending the holding period for equity investments to two or three years, which could help anchor volatile foreign investments.
The report highlights significant foreign portfolio investor (FPI) activity, noting that foreign investors sold shares worth Rs 44,166 crore in October alone, contributing to a total withdrawal of Rs 3.04 lakh crore from Indian equities in 2026. Currently, the LTCG tax rate for foreign investors stands at 12.5 percent, a rate retained in the Union Budget 2026 for listed shares and equity mutual funds.
During the event, Sitharaman also addressed concerns regarding the depreciation of the Indian rupee against the US dollar. She stated that the Reserve Bank of India (RBI) is focused on managing volatility rather than fixing the currency at a specific level. Acknowledging the rupee's significant decline over the past 18 months, she attributed this to external pressures while asserting that India's economic fundamentals remain robust.
Looking ahead, Sitharaman outlined various investment opportunities in sectors such as infrastructure, semiconductors, and renewable energy. She emphasized the importance of developing both advanced and everyday semiconductor applications and highlighted the National Infrastructure Pipeline's growth to over USD 4.5 trillion. This expansion is expected to create numerous investment opportunities across diverse sectors, particularly in renewable energy and aviation-related infrastructure as the civil aviation sector continues to grow.
