A big update has come out for crores of investors investing in the stock market. There was a discussion going on for a long time that the government may abolish the Long Term Capital Gains (LTCG) tax on equity investments. But now the Central Government has made it clear in the Parliament that at present there is no such proposal. That is, LTCG tax will remain applicable on long-term profits from investing in shares as before.
Minister of State for Finance Pankaj Chaudhary said in the Lok Sabha in a written reply that during the assessment year 2025-26, the government got revenue of Rs 1.29 lakh crore from LTCG tax on equity. Earlier in the assessment year 2024-25 this figure was Rs 72,249 crore. This means that there has been a huge increase in the income from this tax in one year. The government also said that data for the next years is not yet available as income tax returns are yet to be filed.
Same rules for foreign and domestic investors
The government also clarified that no special tax exemption has been given to foreign portfolio investors (FPIs) in case of equity investments. Like domestic and retail investors, foreign investors are also subject to 12.5 per cent tax on long-term capital gains from equity. However, the government did point out that foreign investors have been given tax exemption only on investments in government bonds. It aims to attract long-term capital into India from large foreign investors such as pension funds, insurance companies and sovereign wealth funds.
Tax policy is reviewed every year
The government said that all tax policies, including capital gains tax, are reviewed from time to time. Generally, during the budget, decisions on changes are taken keeping in mind the economic conditions and revenue needs. But at present no decision has been taken to remove LTCG tax on equity.
What does it mean for investors?
This statement of the government has made it clear that investors investing in the stock market for a long time should not expect any relief in LTCG tax. In such a situation, investors will have to keep tax rules in mind while making their investment strategy. However, the government may review these rules during the future budget or new tax policy, but at present no changes will be made in the existing system.
Input- ANI
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