Budget 2027: FICCI seeks removal of LTCG tax on listed securities, suggests STT hike

The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Centre to restore the long-term capital gains (LTCG) tax exemption on listed securities in the Union Budget for 2027-28. The industry body said the government could raise the securities transaction tax (STT) on delivery-based trades, if required, to offset the revenue impact. In its pre-Budget recommendations, FICCI said investors have faced both levies since the government reintroduced LTCG tax in 2018 while retaining STT. It argued that the two taxes reduce post-tax equity returns and called for the revised tax regime to remain in place for about 10 years to provide investors with greater certainty.

The 2018 Budget introduced a 10% tax on qualifying long-term capital gains exceeding Rs 1 lakh. The 2024-25 Budget raised the rate to 12.5% and increased the exemption threshold to Rs 1.25 lakh. It also raised the tax rate on qualifying short-term capital gains to 20%. SBI Research, in its latest report, has estimated that removing LTCG tax would cost the exchequer Rs 50,000 crore. FICCI separately proposed allowing foreign investors to calculate capital gains in the currency in which they originally invested. The industry body said rupee depreciation can leave overseas investors with a taxable gain in rupee terms even when the gain disappears after conversion into their original investment currency.