FICCI seeks LTCG tax removal, higher STT as alternative

Industry body FICCI has asked Finance Minister Nirmala Sitharaman to restore the long-term capital gains (LTCG) tax exemption on listed shares in the Union Budget 2027-28, and has proposed raising the securities transaction tax (STT) on delivery-based trades to offset revenue loss. FICCI noted that foreign portfolio investors (FPIs) have withdrawn about Rs 3.08 lakh crore during the year. The chamber said the double levy of LTCG tax and STT, reintroduced in 2018, erodes equity returns, and recommended maintaining any new regime for at least 10 years for investor certainty.

Separately, SBI Research has suggested that abolishing LTCG tax could cost Rs 40,000 to 50,000 crore in FY28, or about 0.1 to 0.2% of GDP, and proposed raising the LTCG exemption threshold to Rs 2 lakh and linking it to inflation. Finance Minister Sitharaman acknowledged FPI and equity market concerns on 2 November, saying the government recognises changed global circumstances and will consider feedback. She noted that the tax structure is similar to 2023-24 when inflows were strong, but circumstances have since changed. FICCI also sought lighter TDS rules, faster tax appeals, and clearer taxation of foreign digital firms.

Update, 4 November 2026: Business Today adds that SBI Research has estimated the revenue loss from scrapping LTCG tax at Rs 40,000 to 50,000 crore in FY28, or about 0.1 to 0.2% of GDP, and proposed raising the LTCG exemption threshold to Rs 2 lakh and a reduced 5% rate for investments held two to three years. The Finance Minister's 2 November remarks are confirmed across all sources.