NEW DELHI: Gurmeet Chadha, CIO at Complete Circle, has urged Finance Minister Nirmala Sitharaman to change capital gains tax rules.
In his tweet on X, he said that the long-term capital gains (LTCG) tax on equities should be tax-free. He also suggested increasing the tenure for LTCG to two years.
Addressing the finance minister, Chadha wrote, “Honourable FM Sitharaman, one request—increase the tenure of LTCG for equities to 2 years & make tax nil. Let STCG tax remain as it is.”
Currently, LTCG for equities is taxed at 10% on gains exceeding ₹1 lakh in a financial year, and tenure varies based on the type of asset.
For equity shares and equity mutual funds, gains are considered long-term if the holding period exceeds one year. In the case of debt mutual funds, the holding period must be more than three years to qualify as LTCG.
For real estate, a property must be held for more than two years to be classified as a long-term asset. Similarly, unlisted shares and other assets also require a holding period of over two years for LTCG benefits.
Chadha said this step would help India in the long run. It would attract more foreign direct investment (FDI) and risk capital. This, in turn, would support infrastructure growth and public sector enterprises. It would also create more jobs.
“We will gain immensely in the long term in the form of FDI, risk capital to fund our capex, more value for PSUs, and ultimately, jobs,” he added.
To cover revenue losses in the short term, he suggested raising the Securities Transaction Tax (STT). “In the short run, higher STT will make up for revenue also,” he said.
For equities, STCG is a flat 15%, while for other assets, it varies based on total income.
Chadha’s remarks come amid rising concerns over India’s capital gains tax rules. Many investors believe the tax system is hurting market sentiment.
Recently, the Indian stock market saw a sharp decline. On Friday, the Sensex fell 1,414 points (1.9%) to 73,198. The Nifty dropped 420 points (1.86%) to 22,124.
This sell-off wiped out nearly ₹9 lakh crore in market value. The total market capitalization of BSE-listed firms fell to ₹384.22 lakh crore.
The capital gains tax policy has been a key issue for foreign investors. Many believe it is discouraging long-term investments in Indian markets.
Chadha’s proposal could bring relief to investors. It may also boost economic growth by attracting more funds into the market.
