Finance Minister Nirmala Sitharaman has announced that the government is open to stakeholder views on reducing capital gains tax on investments in stock markets.
The move aims to make domestic markets more attractive to foreign portfolio investors (FPIs), who have been fleeing Indian markets due to higher capital gains taxes, a weaker rupee, and shifting global allocations.
The government imposes a short-term capital gains tax (STCG) of 20% on equity shares and equity mutual funds, and a 12.5% long-term capital gains (LTCG) tax on annual gains of over ₹125,000 on such investments sold after 12 months.
FPIs were net sellers of securities worth a record ₹1.8 lakh crore in FY26, the highest in 34 years, and have registered net outflows of over $10 billion in FY27 so far.
Sitharaman also announced that the government is considering measures such as issuing sovereign bonds to attract foreign capital amid a fast-depreciating rupee.
