No Plan To Alter Capital Gains Tax Rates At Present: Finance Ministry

The Ministry of Finance has clarified that there is currently no proposal under consideration to change capital gains tax rates, putting an end to speculation about possible revisions in the taxation structure. Responding to a query in Parliament, the ministry said tax policies, including capital gains tax provisions, are reviewed periodically through the annual Budget process and legislative amendments based on economic conditions. However, no changes to the existing capital gains tax rates are being considered at present.

The government also highlighted a significant rise in revenue collected from Long Term Capital Gains (LTCG) tax on equity transactions during Assessment Year (AY) 2025-26. According to data shared by the Finance Ministry, LTCG tax collections from equity transactions reached Rs 1,29,158 crore in AY 2025-26, compared with Rs 72,249 crore in the previous assessment year. The increase represents a growth of nearly 79 per cent, reflecting stronger market activity and higher tax revenues.

Officials clarified that the data for Assessment Years 2026-27 and 2027-28 is not available yet, as income tax returns for the related financial years have not been filed. The government said revenue figures are compiled after the completion of tax filing processes and assessments, making future data dependent on upcoming filings and available official records.

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The Finance Ministry further stated that the existing 12.5 per cent LTCG tax rate applicable to equity investments by domestic and retail investors also applies to Foreign Portfolio Investors (FPIs) investing in equities. The clarification comes amid ongoing discussions about India’s investment taxation framework and concerns among market participants regarding possible changes to capital gains rules.

Meanwhile, the government has introduced changes in the taxation of investments made by FPIs in Government Securities (G-Secs). Under the Income-tax (Amendment) Ordinance, 2026, interest income and capital gains arising from certain G-Sec investments have been exempted from income tax with effect from April 1, 2026. The move is aimed at improving the competitiveness of India’s financial markets and bringing the taxation of government securities closer to international practices.

The government said the exemption is expected to encourage stable and long-term foreign investment flows into India, particularly from institutional investors such as pension funds, insurance companies and sovereign wealth funds. Officials said the measure is part of broader efforts to strengthen the investment environment while maintaining clarity and stability in the country’s tax policies.

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