Reuters reported that the Securities and Exchange Board of India (SEBI) recommended ending long-term capital gains tax on foreign investors’ equity investments in India, a change that would require government approval.
The report said the recommendations were part of private pre-budget representations, citing two people with direct knowledge. They are nonbinding. Reuters said the proposals followed investor feedback on equity taxes and transaction costs, and were intended to reduce foreign investors’ upfront tax burden.
India currently taxes qualifying long-term gains above ₹1.25 lakh at 12.5% for listed equity shares and equity-oriented fund units transferred on or after July 23, 2024, subject to securities transaction tax requirements, according to the Income Tax Department.
SEBI also recommended allowing domestic mutual fund investors to switch between schemes without incurring long-term capital gains tax if they had held the units for more than one year, Reuters reported. The Association of Mutual Funds in India reported industry assets under management of ₹82.64 trillion as of Sept. 30, 2026.
In a July 20, 2026, reply to Parliament, the Ministry of Finance said the 12.5% rate applied equally to domestic investors and foreign portfolio investors (FPIs). At that time, the government had no proposal under consideration to remove the tax for retail or domestic investors. The reply came before the recommendations reported by Reuters.
Moneycontrol reported Oct. 26 that the government was reviewing equity long-term capital gains tax ahead of the budget, but did not report the specific SEBI recommendations. EconoTimes previously covered a separate call to reduce India’s cash-market securities transaction tax.
Reuters identified February’s annual budget as a possible window for a government decision on the recommendations.
