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India rejects plan to scrap LTCG tax on equity gains
Long-term capital gains on listed equity shares and equity mutual funds are taxed at 12.5% on gains above ₹1.25 lakh per financial year, after being held more than 12 months.
India’s government has said there is no proposal to abolish long-term capital gains, or LTCG, tax on equity transactions for retail and domestic investors, ending speculation about a possible rollback sought by some market participants, according to LiveMint Markets. Minister of State for Finance Pankaj Chaudhary made the clarification in a written reply in the Lok Sabha, saying that capital gains tax rates are reviewed periodically as part of the annual budget process and legislative revisions, taking macro-economic parameters into consideration. The clarification was given after lawmakers asked when the government would scrap LTCG tax to revive market sentiment and protect domestic investors. Under the current regime described in the filing, long-term capital gains tax applies when listed equity shares and equity mutual funds are held for more than 12 months, with a flat 12.5% rate on profits exceeding ₹1.25 lakh in a financial year. Short-term capital gains on listed equities held for less than 12 months are taxed at 20%. The government also noted that LTCG tax collections on equity transactions rose nearly 79% year-on-year to ₹1,29,158 crore in assessment year 2025-26, compared with ₹72,249 crore in assessment year 2024-25. Across assessment years, the total collected was ₹2.01 lakh crore.