SBI Research recommends LTCG on equities to be scrapped; calls for DTAA clarity
SBI Research has recommended that the Indian government abolish the long-term capital gains (LTCG) tax on equities to stabilize foreign investment. This proposal comes as foreign portfolio investors have withdrawn over Rs 3 lakh crore from Indian markets in 2026.
Why it matters
The recommendation highlights the economic strain caused by capital flight and the government's struggle to maintain market stability amidst global economic pressures.
With foreign investors pulling money out of Indian equities, economists at the country's largest lender, State Bank of India (SBI), have proposed scrapping the long-term capital gains (LTCG) tax on equity investments to encourage investors to remain invested for longer periods."The government must seriously look into anchoring hot money flows into equity segment by extending the holding period to say 2-3 years and abolishing the long-term capital gains tax for equity," SBI Research said in its Ecowrap report.The proposal is aimed at making foreign capital flows into equities more stable and limiting the chances of abrupt withdrawals that could put pressure on the rupee.The report acknowledged the recent measures taken by RBI to curb pressure on the rupee.“The RBI has taken cudgels, firing a bazooka of measures to arrest the depreciating trends in rupee value,” it said.“While the RBI has been taking all possible steps to thwart a seemingly difficult…
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