The Indian government has firmly ruled out any plans to abolish the Long-Term Capital Gains (LTCG) tax on listed equities. This clarification was provided by Minister of State for Finance Pankaj Chaudhary in response to a question in the Lok Sabha on Monday, July 20, 2026.
No Immediate Change to LTCG Policy
Minister Chaudhary stated that while tax policies, including capital gains rates, are periodically reviewed during the annual Budget exercise based on broader macroeconomic conditions, there is currently no proposal under consideration to withdraw the levy for retail and domestic investors.
This stance comes despite recurring calls from investors and market participants to roll back the tax. Some argue that the LTCG levy discourages long-term investing and reduces post-tax returns, while others advocate for parity with certain foreign portfolio investors who have received recent tax exemptions on government securities.
Significant Revenue Growth Cited
The government, however, highlighted the substantial revenue generated from equity gains. Data shared in Parliament showed that collections from long-term capital gains tax on equity transactions surged by nearly 78%, reaching ₹1,29,158 crore in Assessment Year 2025-26. This is a significant increase from ₹72,249 crore recorded in the previous year.
Understanding the Current LTCG Regime
Under the existing tax framework, long-term capital gains apply to listed shares or equity-oriented mutual funds sold after being held for more than one year. Gains exceeding ₹1.25 lakh in a financial year are taxed at a rate of 12.5%, while gains up to that threshold remain exempt. In contrast, short-term capital gains on listed equities are taxed at 20%. These rates have remained unchanged since the modifications announced in the July 2024 Union Budget.
The issue of LTCG tax has frequently resurfaced over the past year, particularly as equity markets achieved record highs and retail investor participation grew. Many market experts and investors have suggested that either lowering the tax rate or increasing the exemption limit could further incentivize long-term investment and enhance market sentiment. Nevertheless, the Finance Ministry has consistently maintained its position against withdrawing the levy in previous parliamentary discussions.