Govt rules out scrapping LTCG tax on equities — collections jump 79% to ₹1.29 lakh crore
Finance Ministry tells Lok Sabha there's no proposal to remove or cut the 12.5% LTCG tax on listed shares, as collections surged from ₹72,249 crore to ₹1,29,158 crore in one year.
If you were hoping for relief on long-term capital gains (LTCG) tax on stocks and equity mutual funds, the government just closed that door — at least for now.
What was said
Responding to a question in the Lok Sabha on July 20, 2026, Minister of State for Finance Pankaj Chaudhary said there is no proposal under consideration to abolish or reduce the LTCG levy on listed equities for retail or domestic investors. He added that capital gains tax rates are reviewed only during the annual Budget exercise, based on macroeconomic factors — so no mid-year change should be expected.
Why a rollback looks unlikely
The minister also disclosed fresh revenue numbers that explain the government’s reluctance to touch the levy:
| Assessment Year | LTCG tax collected on equities |
|---|---|
| AY 2024-25 (income earned FY2023-24) | ₹72,249 crore |
| AY 2025-26 (income earned FY2024-25) | ₹1,29,158 crore |
That’s a jump of nearly 79% year-on-year, taking combined collections across the two years to roughly ₹2.01 lakh crore. With revenue rising this sharply, a rate cut or exemption widening seems unlikely before Budget 2027.
The rules, unchanged since July 2024
- LTCG on listed shares/equity mutual funds (held over 1 year): taxed at 12.5%, with the first ₹1.25 lakh of gains in a financial year exempt.
- STCG on listed equities (held under 1 year): taxed at 20%.
- These rates apply equally to domestic retail investors and Foreign Portfolio Investors — no separate relief for either.
Separately, the ministry noted that FPI investments in government securities (not equities) were exempted from tax on interest and capital gains from April 1, 2026, via an amendment ordinance — but this carve-out does not extend to equity investments by anyone, foreign or domestic.
What this means for you
- If you’ve been sitting on gains hoping for a tax cut before selling, don’t wait — the current 12.5%/₹1.25 lakh-exemption regime looks set to stay through this financial year at minimum.
- Investors doing tax-loss harvesting or staggering redemptions to use the annual ₹1.25 lakh exemption should continue that strategy as planned; use a capital gains calculator to estimate your liability before booking profits.
- Long-term SIP investors aren’t affected differently from lump-sum investors — the holding-period and exemption rules are identical either way. Check your projected corpus with the SIP calculator.
Source: Lok Sabha written reply by MoS Finance Pankaj Chaudhary, July 20, 2026; reported by Business Standard and Business Today.
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