{"id":4752,"date":"2025-03-05T15:09:26","date_gmt":"2025-03-05T09:39:26","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=4752"},"modified":"2025-05-20T15:22:14","modified_gmt":"2025-05-20T09:52:14","slug":"calls-for-ltcg-tax-review-grow-as-investors-seek-relief","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/calls-for-ltcg-tax-review-grow-as-investors-seek-relief\/","title":{"rendered":"Calls for LTCG Tax Review Grow as Investors Seek Relief Amid Market Weakness"},"content":{"rendered":"

Investors, Experts Urge Government to Tweak Long-Term Capital Gains (LTCG) Tax Structure<\/h3>\n

With Indian equity markets facing a sharp correction and foreign institutional investors (FIIs) withdrawing funds, the demand for a review of the Long-Term Capital Gains (LTCG) tax structure has intensified. Experts argue that the existing tax framework is making Indian markets less attractive, particularly for foreign investors, at a time when global capital flows are crucial for sustaining growth.<\/p>\n

Key Concerns Over LTCG Tax<\/h2>\n
    \n
  1. \n

    India Is One of the Few Markets That Tax Foreign Investors<\/p>\n

      \n
    • India remains one of the only countries globally to tax foreign investors on capital gains.<\/li>\n
    • Experts argue that this tax burden discourages global hedge funds, sovereign wealth funds, and pension funds from making long-term investments in India.<\/li>\n<\/ul>\n<\/li>\n
    • \n

      Rising Tax Rates Add to Investor Woes<\/p>\n

        \n
      • In last year\u2019s Union Budget, Finance Minister Nirmala Sitharaman increased LTCG tax from 10% to 12.5% and Short-Term Capital Gains (STCG) tax from 15% to 20%.<\/li>\n
      • Many investors believe higher tax rates are hurting market liquidity and reducing India\u2019s appeal as an investment destination.<\/li>\n<\/ul>\n<\/li>\n
      • \n

        Structural Issues in Taxation for Foreign Investors<\/p>\n

          \n
        • Global hedge funds investing in India face a tax double-whammy, as capital gains taxes often cannot be offset against taxes paid in their home countries.<\/li>\n
        • This results in double taxation, where investors end up paying tax both in India and in their own country.<\/li>\n<\/ul>\n<\/li>\n
        • \n

          STT Introduction and Broken Promises on LTCG Tax Removal<\/p>\n

            \n
          • When Securities Transaction Tax (STT) was introduced in 2004, it was believed that LTCG and STCG taxes would be phased out.<\/li>\n
          • However, the opposite happened, and investors now pay both STT and capital gains taxes.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n

            What Experts Are Saying<\/h3>\n
              \n
            • \n

              Devarsh Vakil, Head of Prime Research, HDFC Securities<\/p>\n

                \n
              • \u201cThe government should scrap LTCG tax not just for foreign investors but for Indian investors as well.<\/li>\n
              • If complete removal isn\u2019t possible, they should elongate the holding period to 2-3 years and then scrap the tax altogether.\u201d<\/li>\n<\/ul>\n<\/li>\n
              • \n

                Samir Arora, Helios Capital<\/p>\n

                  \n
                • \u201cThe biggest mistake the government made was imposing capital gains tax on foreign investors.<\/li>\n
                • It was a huge mistake, and they should accept it.\u201d<\/li>\n<\/ul>\n<\/li>\n
                • \n

                  Divaspati Singh, Partner, Khaitan & Co<\/p>\n

                    \n
                  • \u201cIndia\u2019s attractiveness as an investment destination is declining due to timid returns, regulatory complexities, and tax burdens.<\/li>\n
                  • Hedge funds face tax problems when investing in India, especially due to double taxation issues.\u201d<\/li>\n<\/ul>\n<\/li>\n
                  • \n

                    Rahul Charkha, Partner, Economic Laws Practice<\/p>\n

                      \n
                    • \u201cA mere tax reduction may not be enough\u2014FIIs want regulatory stability, ease of doing business, and clarity on dividend taxation.\u201d<\/li>\n<\/ul>\n<\/li>\n
                    • \n

                      Shravan Shetty, Managing Director, Primus Partners<\/p>\n

                        \n
                      • \u201cIndia needs long-term growth capital, and a friendlier tax regime could attract pension and sovereign funds.<\/li>\n
                      • A cut in LTCG tax could help attract foreign inflows, especially when the rupee is depreciating and US interest rates have risen.\u201d<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

                        Potential Solutions to Reform LTCG Tax<\/h2>\n
                          \n
                        1. \n

                          Increase the Holding Period for LTCG Exemption<\/p>\n

                            \n
                          • Instead of taxing gains made after one year, extend the LTCG exemption to two or three years, encouraging long-term investments.<\/li>\n<\/ul>\n<\/li>\n
                          • \n

                            Lower or Remove LTCG Tax for Foreign Investors<\/p>\n

                              \n
                            • Many Asian and Western markets do not impose capital gains tax on FIIs.<\/li>\n
                            • Removing or reducing LTCG tax could attract more foreign capital into Indian equity markets.<\/li>\n<\/ul>\n<\/li>\n
                            • \n

                              Provide a Tax Credit System for Foreign Investors<\/p>\n

                                \n
                              • Allow foreign investors to offset Indian LTCG taxes against taxes paid in their home country, eliminating double taxation issues.<\/li>\n<\/ul>\n<\/li>\n
                              • \n

                                Phase Out Capital Gains Tax as STT Revenue Increases<\/p>\n

                                  \n
                                • Increase reliance on STT (Securities Transaction Tax) while gradually reducing LTCG tax.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n

                                  Government\u2019s Likely Stance<\/h2>\n
                                    \n
                                  • The government is unlikely to remove LTCG tax completely, as it remains a key revenue source.<\/li>\n
                                  • However, policymakers may tweak the structure to ease tax burdens without losing revenue.<\/li>\n
                                  • Possible changes could include raising the holding period for tax-free LTCG or offering tax relief to long-term foreign investors.<\/li>\n<\/ul>\n

                                    Will the Government Act?<\/h2>\n

                                    With India needing foreign capital to sustain economic growth, tax experts and investors are urging the government to reconsider its capital gains tax policy. While a full rollback seems unlikely, adjustments such as a longer holding period for tax exemptions or a reduction in FII tax rates could help boost investor confidence.<\/p>\n

                                    The upcoming budget and policy announcements will be closely watched to see if the government takes steps to address these concerns and make India a more attractive investment destination.<\/p>\n","protected":false},"excerpt":{"rendered":"

                                    Investors, Experts Urge Government to Tweak Long-Term Capital Gains (LTCG) Tax Structure With Indian equity markets facing a sharp correction and foreign institutional investors (FIIs) withdrawing funds, the demand for a review of the Long-Term Capital Gains (LTCG) tax structure has intensified. Experts argue that the existing tax framework is making Indian markets less attractive, […]<\/p>\n","protected":false},"author":4,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-4752","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/4752","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=4752"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/4752\/revisions"}],"predecessor-version":[{"id":4754,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/4752\/revisions\/4754"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/4753"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=4752"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=4752"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=4752"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=4752"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}