There has been a lot of buzz in recent days about the government possibly removing the Long-Term Capital Gains (LTCG) tax on stock market investments.
However, the government has now made its position clear and said these reports are not true.
The Centre has confirmed that there is currently no proposal to abolish the LTCG tax on listed shares.
Government Rejects LTCG Tax Removal Reports
Speaking in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the government is not considering any proposal to remove the LTCG tax for retail or domestic investors.
He also explained that tax rules and capital gains rates are reviewed every year during the Union Budget, based on the country’s economic conditions. As of now, no decision has been taken to scrap this tax.
Why Investors Want the Tax Removed
Many investors and market experts have recently urged the government to withdraw the LTCG tax. They believe it reduces overall returns and discourages people from investing for the long term.
Some experts have also suggested that domestic investors should receive tax benefits similar to those recently given to certain foreign portfolio investors (FPIs) investing in government bonds.
Why the Government Is Unlikely to Remove It
One of the biggest reasons the government is unlikely to remove the LTCG tax is the strong revenue it generates.
According to data shared in Parliament, the government expects to collect around ₹1.29 lakh crore from LTCG tax on listed shares in 2025-26, compared to ₹72,249 crore in the previous year.
This represents an increase of about 78%.
With tax collections rising sharply, the LTCG tax has become an important source of government revenue. This is why the government has made it clear that there is currently no plan to abolish it.
