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SEBI Recommends Scrapping 12.5% Long-Term Capital Gains Tax on Foreign Investors
SEBI recommends scrapping the 12.5% long-term capital gains tax on foreign investors in Indian equities.
Key points
- Foreign investors currently pay 12.5% LTCG tax on eligible equity held for more than 12 months.
- Foreign investors have sold a record $31 billion of Indian stocks in 2026.
- The recommendations are non-binding, and the final decision rests with the government.
Why it matters. If the government accepts the proposals, the removal of LTCG tax for foreign investors could reduce their tax burden and improve India's attractiveness as an investment destination.
India's market regulator SEBI has recommended scrapping the 12.5% long-term capital gains tax on equity investments by foreign investors, according to a Reuters report on 2 November. Foreign investors have sold a record $31 billion of Indian stocks in 2026, and SEBI says the move aims to attract overseas capital. SEBI also proposed exempting domestic mutual fund investors from LTCG tax on scheme switches if they have held the investment for more than a year.
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SEBI Recommends Scrapping 12.5% Long-Term Capital Gains Tax on Foreign Investors
The Securities and Exchange Board of India has recommended scrapping the long-term capital gains tax on equity investments by foreign investors. The tax is currently 12.5%. The regulator also proposed tax relief for domestic mutual fund investors switching between schemes. The recommendations are aimed at attracting overseas capital and encouraging retail investors to stay invested amid weak equity market returns. According to a Reuters report on 2 November, the proposals have been submitted to the government ahead of Budget 2027. The government has not yet decided whether to adopt them.