Neutral impactCorporate Action
Why is there a growing demand to reduce LTCG tax? How much revenue does the Indian government earn from it?
Mint 1 hr ago·27 Oct 2026, 12:14 pm
A growing debate is underway regarding the long-term capital gains (LTCG) tax in India, with many investors and experts arguing that the current levy acts as a deterrent to participation. The discussion centers on the combined impact of the capital gains tax and the Securities Transaction Tax (STT), which critics often label a 'double whammy' that reduces the net returns for both domestic and foreign investors.
For retail investors, this tax structure directly impacts the compounding power of their portfolios. A higher effective tax rate can discourage long-term holding strategies, which are essential for wealth creation. The government, however, views these taxes as a critical source of revenue to fund public infrastructure and social welfare programs.
Moving forward, investors should watch for any policy announcements or budget discussions that might propose changes to these rates. While the government is unlikely to reduce revenue sources immediately, a shift in sentiment could signal a more investor-friendly approach to capital markets in the future.
Key takeaways
- Category: Corporate Action.
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