India retains equity LTCG tax
Analysis based on 6 articles · First reported Jul 20, 2026 · Last updated Jul 20, 2026
The confirmation that domestic investors will continue paying LTCG tax may dampen retail investor sentiment, but the exemption for FPIs on government securities could attract foreign capital and support the rupee. The NIFTY 50's underperformance and FPI selling pressure highlight ongoing market challenges.
India's finance ministry confirmed on July 20, 2026, that there is no proposal to scrap the long-term capital gains (LTCG) tax on equities for domestic investors, despite recently exempting foreign portfolio investors (FPIs) from LTCG tax on government securities. The clarification follows a decision last month to exempt FPIs from LTCG tax on government debt, aimed at supporting the rupee and reviving overseas flows. Domestic and retail investors will continue to pay a 12.5% LTCG tax on qualifying equity gains, the same rate applicable to FPIs for equity investments. The exemption for FPIs on government securities, effective April 1, 2026, is intended to align India's tax treatment with global practices and attract stable long-term foreign capital. FPIs have sold about $28.03 billion of Indian equities in 2026, but bought $1.25 billion in July. The NIFTY 50 has lost about 7.2% in 2026. LTCG tax collections rose to 1.29 trillion rupees in assessment year 2025-26.
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