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Sitharaman acknowledged concerns over taxation and foreign investment outflows, saying the government would have to weigh several factors before considering any changes.
Sitharaman also acknowledged calls for extending to the equity market the kind of support provided to the debt market. (File image)
Finance Minister Nirmala Sitharaman on Monday said she would listen to the concerns raised by foreign portfolio investors (FPIs) over India’s capital gains tax structure and then “see what we can do”, amid a growing debate over demands for a cut in long-term capital gains (LTCG) tax.
Speaking at the Financial Express Leadership Awards, Sitharaman acknowledged concerns over taxation and foreign investment outflows, saying the government would have to weigh several factors before considering any changes.
“These are very delicate matters, and a lot of business and commercial acumen will have to come into play,” she said.
Referring to the changing investment climate, the Finance Minister pointed out that the tax structure had remained the same even when foreign investment inflows were at record levels in 2023.
“The taxation structure was what it is today even in 2023, when inflows were at record highs,” she said.
“Today, the circumstances have changed. FII outflows have happened, and voices of concern are louder. I will consider all this,” Sitharaman added.
She also underlined the importance of equity investments in sustaining India’s economic growthsaying the country would need substantial capital to maintain a growth rate of 7% or more.
“At a time when growth is very important, and to sustain growth of 7% plus, we need capital, especially equity,” she said.
Sitharaman also acknowledged calls for extending to the equity market the kind of support provided to the debt market. “We also have this voice that equity needs the kind of support given to the debt market. I recognise this voice,” she added.
India’s markets regulator, the Securities and Exchange Board of India (SEBI), has recommended that the government scrap the long-term capital gains (LTCG) tax on foreign investors, Reuters reported, citing two sources familiar with the matter.
SEBI has also proposed tax relief for domestic mutual fund investors, suggesting that they be exempted from LTCG tax when they sell existing holdings to reinvest the proceeds in new investments, the report said.
FPIs Withdraw Rs 3.08 Lakh Crore From Indian Equities
Foreign portfolio investors withdrew a record Rs 3.08 lakh crore (USD 32.73 billion) from Indian equities between January and September 2026. The outflow was nearly double the Rs 1.66 lakh crore withdrawn during the entire calendar year 2025.
The sustained selling by foreign investors has intensified concerns over India’s attractiveness as an investment destination and renewed the debate over the tax burden on equity investments.
What Is The Current LTCG Tax Structure?
Currently, long-term capital gains from the sale of listed equity shares and equity-oriented mutual funds are taxed at 12.5%, along with applicable surcharge and cess, on gains exceeding Rs 1.25 lakh in a financial year.
To qualify as a long-term capital asset, listed equity shares and equity-oriented mutual fund units must generally be held for more than 12 months.
If these investments are sold within 12 months of acquisition, the gains are treated as short-term capital gains (STCG) and taxed at 20%, along with applicable surcharge and cess.
Quick Answers
Ask News18Long-term capital gains (LTCG) on listed equity shares and equity-oriented mutual funds are taxed at 12.5% for gains exceeding Rs 1.25 lakh in a financial year. Assets must be held for more than 12 months to qualify as long-term. Gains from investments sold within 12 months are classified as short-term capital gains (STCG) and taxed at 20% along with applicable surcharges and cesses.
Ask News18About the Author
Saurabh Verma is a Deputy News Editor at News18.com, specialising in Indian politics and breaking global news. With years of experience tracking election strategies, he decodes domestic issues for mil…Read More
November 02, 2026, 6:56 PM IST
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