India's Long-Term Capital Gains Tax: How It Compares With Leading Economies
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The Securities and Exchange Board of India (SEBI) has reportedly recommended long-term capital gains (LTCG) tax relief for foreign investors who reinvest proceeds from selling Indian securities into new investments.
According to a Reuters report citing sources, the proposal aims to encourage foreign investment and retain capital within domestic equity markets.
However, neither SEBI nor the government has officially confirmed the recommendation.
Under the proposed arrangement, eligible foreign investors could avoid LTCG tax when switching from existing holdings to new securities, subject to conditions that remain undisclosed.
Angel One, CDSL, Motilal Oswal Shares Rally Up To 7% As Sitharaman Signals Openness To LTCG Tax ReviewIndia currently levies 12.5% LTCG tax on qualifying listed equity gains exceeding ₹1.25 lakh annually.
The revised rate applies to eligible transfers from July 23, 2024, following changes introduced in the Union Budget 2024.
Previously, the applicable LTCG rate was 10%.
Qualifying short-term equity gains attract 20% tax, excluding applicable surcharge and cess.
The rules cover eligible listed shares, equity-oriented mutual funds and business trust units, subject to securities transaction tax requirements.
The reported proposal comes amid concerns about foreign investor participation and India's competitiveness against international financial centres.
How India's Equity Tax Rates Compare Globally
Hong Kong generally does not impose capital gains tax on investments held as capital assets, although profits from trading activities may be taxable.
Singapore also generally excludes capital gains from taxation, subject to the nature of the transactions and applicable rules.
In the UK, headline individual capital gains tax rates include 18% and 24%, depending on the taxpayer's circumstances.
Japan taxes individual stock gains at approximately 20.315%, including national and local levies.
The US generally distinguishes between short-term and long-term gains based on whether assets are held for more than one year.
These international comparisons highlight differences in taxation systems, although rates and exemptions depend on investor categories and specific transactions.
Any change to India's LTCG framework would require an official policy decision and the necessary legal implementation.
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