SEBI reportedly proposes scrapping LTCG tax for foreign investors; Sensex, Nifty rise 1%
A report says the markets regulator wants to drop long-term capital gains tax on foreign investments in India, and stocks rose on the news.
The 30-second read
- SEBI has reportedly proposed removing LTCG tax on foreign investors' investments in India.
- FPIs now pay 12.5 per cent LTCG and 20 per cent STCG on listed equity.
- Sensex and Nifty were each trading about 1 per cent higher on Monday.
IllustrationSEBI, the markets regulator, has reportedly proposed removing long-term capital gains (LTCG) tax on foreign investors' investments in India. The proposal was first reported by Business Today, which pointed to a Reuters report. It is a report of a proposal, not a final decision.
Today, foreign portfolio investors pay 12.5 per cent LTCG tax on listed equity, according to Business Today. Short-term gains are taxed at 20 per cent. Surcharge and cess come on top, so the effective rate is somewhat higher. Trades also attract securities transaction tax on top of this, and some investors may be able to seek relief under tax treaties, based on their jurisdiction.
Markets responded well. On Monday, the Sensex and Nifty were each about 1 per cent higher, as first reported by Business Today. NDTV Profit separately reported that SEBI also suggested tax-neutral moves from one mutual fund scheme to another, for investments older than a year.
Why it matters
Removing the tax could ease the burden on foreign investors in Indian stocks after heavy outflows. Mutual fund investors may also gain if tax-neutral switching is allowed.
The data
| Type of gain | Rate |
|---|---|
| Long-term (LTCG) | 12.5 per cent |
| Short-term (STCG) | 20 per cent |
