SBI Research recommends LTCG on equities to be scrapped; calls for DTAA clarity
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. Foreign portfolio investors (FPIs) currently face a 12.5% LTCG tax on equity investments. The Union Budget 2026 retained this rate for listed shares and equity mutual funds, continuing the tax framework introduced as part of a major…
State Bank of India's research team has suggested scrapping the long-term capital gains (LTCG) tax on equities to attract foreign investors to hold onto their investments for longer periods. This change, aimed at stabilizing foreign capital flows into the equity segment, would also abolish the tax on long-term capital gains for equities.
The proposal comes amid foreign portfolio investors (FPIs) withdrawing substantial amounts from Indian equities, driven by factors such as elevated crude oil prices, a stronger US dollar, and rising US bond yields. To address this, SBI Research recommends extending the holding period to 2-3 years and streamlining the repatriation of export earnings, with a reasonable timeframe of around six months.
Additionally, clearer rules on withholding tax for external commercial borrowings (ECBs) are needed to ensure borrowers benefit from Double Taxation Avoidance Agreements (DTAA) and to build investor confidence.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 2 other outlets
- SBI Research Calls For Scrapping LTCG Tax On Equities Amid ₹3.04 Lakh Crore FPI Outflows In 2026 freepressjournal.in
- SBI Research calls for scrapping LTCG tax on equities amid record FPI outflows thehindubusinessline.com
