[3:52 pm, 20/7/2026] sheetal 10x: The government has ruled out any immediate plans to abolish the long-term capital gains (LTCG) tax on listed equities, ending fresh speculation over a possible rollback of the levy that has been demanded by sections of the investment community.
Responding to a question in the Lok Sabha on Monday, Minister of State for Finance Pankaj Chaudhary said there is currently no proposal under consideration to scrap the tax for retail or domestic investors. He added that tax policies, including capital gains tax rates, are reviewed periodically during the annual Union Budget after considering broader macroeconomic conditions.
The clarification comes after repeated appeals from investors, market experts and industry bodies, many of whom have argued that the tax reduces post-tax returns and discourages long-term investment in Indian equities. Some have also sought parity with certain foreign portfolio investors who have received tax exemptions for investments in government securities.
However, the government indicated that the tax has become an increasingly important source of revenue.
Data presented in Parliament showed that collections from LTCG tax on equity transactions rose nearly 78 percent year on year. Revenue increased from ₹72,249 crore in Assessment Year 2024-25 to ₹1,29,158 crore in Assessment Year 2025-26, reflecting both strong market activity and the growing contribution of capital gains taxation to the exchequer.
Under the existing tax regime, long-term capital gains apply when listed shares or equity-oriented mutual funds are sold after being held for more than one year. Gains exceeding ₹1.25 lakh in a financial year are taxed at 12.5 percent, while gains up to that limit remain exempt. Short-term capital gains on listed equities continue to attract a 20 percent tax.
The government’s latest position reinforces a stance it has maintained in previous parliamentary responses. While periodic reviews of tax policy will continue through the Budget process, there is currently no indication that the Centre intends to remove the LTCG tax.
For investors, the announcement provides policy clarity, even as debates over balancing revenue collection with incentives for long-term investing are likely to continue.
Source: India Today
