Stories
SBI Economists Urge Abolition of LTCG Tax on Equities to Curb Outflows
N
News18•12-10-2026, 19:15
SBI Economists Urge Abolition of LTCG Tax on Equities to Curb Outflows
- •Economists at SBI have called for abolishing the long-term capital gains tax on equities to encourage investors to stay invested longer and anchor volatile foreign capital flows.
- •Foreign portfolio investors currently pay a 12.5 percent LTCG tax on equity investments, a rate maintained in the Union Budget.
- •Foreign investors have withdrawn massive amounts from Indian equities in recent months due to factors like elevated crude oil prices, a firmer US dollar, and higher US bond yields.
- •SBI Research also suggested streamlining the repatriation of export proceeds within six months and providing greater clarity on withholding tax for external commercial borrowings.
Key Questions Answered
Economists at SBI have called for abolishing the long-term capital gains tax on equities and extending the holding period to two to three years to anchor volatile foreign capital flows and prevent sudden outflows.
Foreign portfolio investors currently pay a 12.5 per cent long-term capital gains tax on equity investments, which applies equally to domestic and retail investors.
Foreign investors have withdrawn more than Rs 3 lakh crore from Indian equities during 2026, driven by factors like elevated crude oil prices, a firmer US dollar, and higher US bond yields.
