Finance Minister Nirmala Sitharaman indicated that the government is open to assessing foreign portfolio investors' grievances regarding long-term capital gains levies on equities. While noting the tax framework remained identical during record inflows in 2023-24, she recognized that recent institutional withdrawals demand business and commercial acumen. The remarks come as market regulator SEBI has reportedly proposed targeted tax relief measures to revive foreign investment momentum.
Key points
The Indian government is reviewing equity tax frameworks to address growing foreign portf…: The Indian government is reviewing equity tax frameworks to address growing foreign portfolio investor concerns over market outflows.
Regulatory proposals submitted by SEBI seek to eliminate equity long-term capital gains t…: Regulatory proposals submitted by SEBI seek to eliminate equity long-term capital gains taxes specifically for foreign investors.
Domestic mutual fund investors could also receive capital gains exemptions when switching…: Domestic mutual fund investors could also receive capital gains exemptions when switching between different investment schemes under proposed measures.
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NEW DELHI: Finance minister
Nirmala Sitharaman on Monday said the government would consider concerns raised by foreign portfolio investors (FPIs) over India's capital gains tax structure, amid growing demands for a reduction in long-term capital gains (LTCG) tax on equities.
Sitharaman acknowledged that the government was aware of foreign investors' concerns over India's tax structure, but said taxation was only one of several factors influencing investment decisions.
She noted that the tax structure had remained unchanged since 2023-24, when India recorded strong foreign investment inflows.
However, market conditions have since changed, with foreign institutional investors (FIIs) reporting significant outflows and concerns over the tax regime becoming more pronounced.
“These are very delicate matters, and a lot of business and commercial acumen will have to come into play,” the finance minister said at the Financial Express Leadership Awards 2026.
“The taxation structure was what it is today even in 2023, when inflows were at record highs. Today, the circumstances have changed. FII outflows have happened, and voices of concern are louder,” Sitharaman said.
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