New Delhi : The Centre on Monday clarified that it has no proposal to abolish the long-term capital gains (LTCG) tax on listed equities, ruling out speculation that the levy could be withdrawn for retail and domestic investors. Replying to a question in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the government is not considering any proposal to remove the LTCG tax.
He added, however, that tax policies, including capital gains taxation, are reviewed periodically as part of the annual Union Budget exercise, taking into account the prevailing macroeconomic environment. The clarification comes amid repeated demands from investors and market participants to roll back the tax, with many arguing that it discourages long-term investing and lowers post-tax returns.
Data presented in Parliament showed that revenue from LTCG tax on equity transactions jumped nearly 78% to Rs 1,29,158 crore in Assessment Year 2025-26, up from Rs 72,249 crore in the previous year, underlining the tax’s growing contribution to government revenues. Under the current tax regime, long-term capital gains arise when listed shares or equity-oriented mutual funds are sold after being held for more than one year.
The issue has resurfaced repeatedly over the past year as Indian equity markets scaled record highs and retail participation surged. Investors and market experts have argued that lowering the LTCG tax rate or raising the exemption threshold could encourage long-term investing and improve market sentiment. However, the Finance Ministry has consistently maintained that there is no proposal to withdraw the tax.
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