State Bank of India Research estimates that abolishing India’s long-term capital gains tax could cost the government Rs 40,000–50,000 crore as projected collections fall from their FY25 peak. The Economic Times and Moneycontrol reported the estimate.
The Economic Times reported that the research linked the lower outlook to weaker stock market returns and foreign investor outflows. SBI Research’s reported estimates put collections at about Rs 1 lakh crore in FY26 and Rs 40,000–50,000 crore in FY27. Those figures are forecasts, not finalized government receipts.
In a July 20 written answer to India’s Lok Sabha, or lower house of Parliament, the government reported Rs 1,29,158 crore in revenue from LTCG tax on equity transactions for FY 2024–25. It gave the FY 2023–24 figure as Rs 72,249 crore. The government said return data for FY 2025–26 and FY 2026–27 was not yet available.
The same answer said no proposal to abolish LTCG tax for domestic or retail investors was under consideration at that time. If the tax were removed, government revenue from qualifying gains would fall while investors with those gains would pay less.
The Economic Times and Moneycontrol also reported possible alternatives from SBI Research. These included raising the annual exemption to Rs 2 lakh, setting a 5% rate for holdings of two to three years and a 0% rate for holdings longer than three years. Another option was a 50% increase in the securities transaction tax (STT), which SBI Research estimated could raise about Rs 45,000 crore in FY28. These are research scenarios, not announced policy changes.
Income Tax Department guidance lists a 12.5% rate on qualifying long-term gains from specified listed securities above the annual Rs 1.25 lakh threshold. The government said tax policies are reviewed through the annual budget process.
