UAE-based nonresident Indians who own Indian shares have no date for a possible tax change after Finance Minister Nirmala Sitharaman said this week she would consider investor concerns, Gulf News reported. She did not identify a levy for review or say whether any future relief would cover shares already held, the outlet said.
The comments came as investors pressed for a response to market strain. A Bloomberg report cited by Gulf News said the performance gap between Indian equities and emerging-market peers was the widest in more than 30 years. Bloomberg also pointed to high oil prices, rising global bond yields, elevated share valuations and weak earnings growth as pressures on the market. Gulf News reported that Sitharaman said foreign investors had recently begun returning.
Sitharaman pointed to sizable overseas investment into India in both 2023 and 2024, when a comparable tax structure was in place, Gulf News reported. She also said India needs capital to support annual economic growth above 7%, according to the outlet.
Gulf News reported that India increased the rate on qualifying short-term equity gains to 20% from 15% in July 2024. The rate on qualifying long-term gains rose to 12.5% from 10%. The report described listed shares held for more than 12 months as long-term and said the 12.5% rate applies to eligible annual gains above Rs125,000.
The report described securities transaction tax (STT) as a charge tied to transaction value, while capital-gains tax depends on eligible profits. A lower STT could reduce the cost of a sale even if the shares have fallen in value. A lower long-term gains rate would matter to sellers with taxable profits; Gulf News reported that sellers whose eligible annual gains do not exceed Rs125,000 would see no direct benefit from a rate cut.
SBI Research has proposed eliminating the long-term equity gains tax while extending the required holding period to two or three years, Gulf News reported. Sitharaman did not endorse the proposal.
Gulf News said India generally presents its federal budget at the start of February. Sitharaman set no date for further consideration of investor concerns, and the outlet reported that existing rates remain in effect.
