Government will consider FPI concerns over equity taxation, says Sitharaman
Finance Minister Nirmala Sitharaman acknowledged the anxiety of retail investors and equity participants regarding the current capital gains tax structure.
Finance Minister Nirmala Sitharaman said on Monday that the government would look into the issues raised by foreign portfolio investors (FPIs) regarding India's capital gains tax. Speaking at the Financial Express Leadership Awards 2026, Sitharaman noted that while taxation is one factor in investment decisions, she understands the sensitivity felt by retail investors and market participants, according to a Times of India report.
The Finance Minister pointed out that the tax structure remained the same during 2023-24, a period when the country saw its highest levels of foreign investment inflows. She noted that while circumstances and challenges have changed since then, including an increase in net foreign institutional investor (FII) outflows, those outflows have now started to recover.
Sitharaman stated that India requires capital to maintain economic growth of more than 7 per cent. She said she recognises the concerns being voiced but would not provide further details at this stage.
The remarks follow reports that the Securities and Exchange Board of India (SEBI) has suggested tax relief for both domestic and foreign investors. A Reuters report stated that SEBI has asked the government to consider removing the long-term capital gains (LTCG) tax on equity investments made by foreign investors.
The SEBI proposal also reportedly includes tax relief for domestic mutual fund investors who switch between different schemes. These recommendations have been submitted before the Union Budget scheduled for February.