New Delhi, Oct 13 (IANS) Finance Minister Nirmala Sitharaman on Tuesday declined to rule out changes to the long-term capital gains tax regime, saying preparations for the next Union Budget have begun and this was not right moment to say what the government would consider. Speaking at the Bloomberg New Economy Forum here, FM Sitharaman acknowledged that investors in India and abroad have been commenting on issue.

However, she also pointed to securities transaction tax as a related question. Market participants have raised issue of whether all asset classes should be treated similarly, according to her. The government will keenly hear views on these matters, she added. Moreover, her remarks come as the government prepares for Union Budget 2027-28, due to be presented on February 1, 2027. Under current rules, long-term capital gains on listed equities and equity mutual funds held for more than one year are taxed at 12.5 per cent, while gains up to Rs 1.25 lakh annually are exempt.

The changes were introduced in the July 2024 Budget, when the government increased the LTCG rate from 10 per cent and raised the exemption threshold from Rs 1 lakh. Budget 2026 retained the capital gains tax structure despite expectations from sections of the market for either a lower tax rate or a higher exemption limit. However, it increased the securities transaction tax on futures and options trades.

However, industry groups and foreign portfolio investors have repeatedly argued that India's capital gains tax framework affects the competitiveness of domestic equity markets and weighs on investment flows. Moreover, foreign investors have remained net sellers of Indian equities for extended periods this year. Apart from that, equity markets traded higher following the minister's remarks as the benchmarks Sensex and Nifty ended more than 1 per cent higher each.

--IANS