As the government prepares its fiscal plans for the upcoming budget, the Securities and Exchange Board of India (SEBI) has recommended key tax reforms to enhance the attractiveness of India’s equity markets. In its pre-Budget submissions, SEBI has proposed scrapping the 12.5% long-term capital gains (LTCG) tax on foreign portfolio investor (FPI) equity investments, a move intended to encourage overseas capital inflows. The recommendation also includes allowing tax-neutral switching between mutual fund schemes held for over a year, targeting domestic retail investors and reducing their tax burdens.
The proposals come as SEBI highlights the need to address high transaction costs in Indian equity markets, which have been a persistent concern for investors. The regulator’s focus on reducing these costs aligns with broader efforts to improve market efficiency and investor confidence.
SEBI’s recommendations were submitted to the government as part of its pre-Budget submissions, reflecting a strategic push to influence fiscal policy and address market dynamics ahead of the upcoming budget deliberations. The proposals aim to strike a balance between supporting foreign investors and providing relief to domestic investors, signaling a dual approach to strengthening India’s financial markets.
The regulator’s focus on reducing these costs aligns with broader efforts to improve market efficiency and investor confidence.