समाचार Samāchār · Business · 2 November 2026

Sebi asks the Centre to drop LTCG for foreign investors. The Budget decides

Reuters reports Sebi wants long-term capital gains tax scrapped for foreign portfolio investors. It is a recommendation, not a decision. In July the government told Parliament it had no such plan.

The markets regulator has taken a position on a tax foreign investors have repeatedly asked India to reform. Sebi has recommended that the government remove long-term capital gains tax for foreign portfolio investors. Reuters reported this on Monday, citing sources. Business Standard and Business Today carried it. It is a pre-Budget representation and it binds no one. The decision rests with the Centre and is likely to come in the Budget in February.

The reason is the outflow. Foreign investors sold about ₹2.95 lakh crore of Indian shares this year by end-October, on CDSL data. Business Today puts it at a record $31 billion. They pay 12.5% on long-term gains and 20% on short-term gains, with securities transaction tax on top. Sebi has also proposed relief for domestic mutual fund investors who switch schemes after holding units for over a year.

The obstacle is revenue and parity. Equity LTCG brought in ₹1.29 lakh crore in FY25 from all investors. The reports do not give the foreign share. Jefferies says the government will have to weigh that cost. On 20 July, Minister of State Pankaj Chaudhary told the Lok Sabha there was no proposal to abolish the tax, and that the 12.5% rate applied equally to retail investors and foreign funds. In mid-October, Finance Minister Nirmala Sitharaman said she was open to feedback on LTCG and STT. A foreign-only exemption would end that equality. Indian savers will ask about it.

The lever is real but small. JM Financial estimates removal adds about 2.2 percentage points a year to a foreign investor’s dollar return. IIFL puts it at 2.3. JM calls it “a small lever beside valuation” and sees $3–5 billion of extra inflows in FY28 in its bull case. Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services, said: “If and when this happens, it is likely to be viewed largely as a positive development.”

The Sensex closed up 1,233 points at 75,692.78 on Monday, its third straight gain. Do not credit Sebi alone. Falling oil and Reliance after its second-quarter results did much of the lifting.

What a founder takes from it: Treat this as a signal, not a plan. A founder planning a listing should watch the Budget and build the case for foreign money on earnings. A tax line can bring capital to the door. Only the business keeps it there.