Scrap, cut or tweak? Centre weighs options on LTCG, STT to stem foreign investor exodus
The Economic Times · Deepshikha Sikarwar and Nishanth Vasudevan ·
The Centre is weighing proposals to scrap or lower long-term capital gains tax and recalibrate securities transaction tax as it seeks to address foreign investor outflows. Market participants have favoured scrapping LTCG on equities and selectively raising STT on options, while regulators are understood to support removing LTCG to attract overseas capital.
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These include scrapping LTCG altogether, removing it just for foreign portfolio investors (FPIs), or lowering the rate. As for STT, suggestions include reducing it for some products and increasing it for others, people familiar with the discussions said.
"A well thought-out call would be taken," said an official. Finance minister Nirmala Sitharaman has said she will consider investors' concerns regarding LTCG. These measures are being considered as a way of stemming the exodus of overseas investors that has led to a slump in Indian stock markets.
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