Budget 2027-28 may consider cutting LTCG to boost stock market sentiment
Government weighs lowering 12.5% capital gains levy, allowing foreign investors to calculate gains in dollar terms
The Indian government is contemplating lowering the long-term capital gains tax, currently set at 12.5%, and permitting foreign investors to calculate gains in dollar terms as part of efforts to boost stock market sentiment. This proposal, reported by The Indian Express, is being discussed ahead of the Union Budget 2027-28. The government aims to address concerns among domestic and foreign investors due to a prolonged period of poor stock market performance and sluggish wage growth, which have negatively impacted investor sentiment, particularly among the middle class.
Finance Minister Nirmala Sitharaman, during a Bloomberg New Economy forum, described the debate surrounding the LTCG tax as "healthy" and expressed her openness to hearing various perspectives on the issue. The government is exploring measures to revive market confidence and improve the investment climate, with a senior official confirming the exploration of options, including a reduction or removal of the capital gains tax.
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