India’s equity markets are grappling with sustained outflows as foreign investors continue to divest aggressively. According to market data, overseas investors have sold a record ₹2.5 trillion worth of Indian stocks, reflecting growing concerns over tax burdens and high transaction costs.
In a strategic move ahead of the Union Budget, the Securities and Exchange Board of India (SEBI) has proposed removing the long-term capital gains (LTCG) tax for foreign investors. The recommendation, part of SEBI’s pre-Budget submissions, aims to address the persistent outflows and reduce the overall tax burden on international investors. The proposal also includes tax relief measures for mutual fund investors, signaling broader efforts to enhance market attractiveness.
SEBI proposes removal of long term capital gains tax for foreign investors #ltcg #Sensex #Nifty https://t.co/8VxekHk5AB
SEBI has highlighted that transaction costs for investing in Indian equities are among the highest globally, discouraging foreign participation. "Transaction costs for investing in equity in India are the highest in the world," the regulator noted, emphasizing the need for structural reforms. The proposals, while not binding, carry significant weight as policymakers prepare for the upcoming budget discussions in February.
The proposals, while not binding, carry significant weight as policymakers prepare for the upcoming budget discussions in February.
By proposing the removal of the LTCG tax, SEBI aims to alleviate some of these concerns, making Indian equities more competitive for international investors. A source familiar with the recommendations stated that the proposals are designed to reduce the upfront tax burden, potentially reversing the current trend of sustained divestment.
🚨 SEBI backs removal of LTCG tax for foreign investors: Report SEBI has also proposed tax relief for domestic mutual fund investors, suggesting they be exempt from LTCG if they are selling existing holdings to invest in new ones, the report said Read More: https://t.co/YArxkuNpLv
Submitted as part of SEBI’s pre-Budget representations, these proposals align with broader efforts to stabilize the equity market. The regulator’s recommendations reflect feedback from foreign investors and internal assessments of India’s tax structure, which has been a key factor in the recent selling spree. While the final decision rests with the government, SEBI’s push underscores the urgency of addressing tax-related barriers to foreign investment.
Beyond LTCG tax relief, SEBI’s proposals include measures to ease tax burdens for mutual fund investors, reinforcing efforts to strengthen domestic and international participation.
SEBI Proposes Scrapping LTCG Tax for Foreign Investors Amid Record Capital Outflows #SEBI #LTCG #StockMarketIndia #FIIs #MutualFunds #IndianEquities #RelianceIndustries #BusinessToday | @sakshibatra18 @SudipBandyopad4 https://t.co/1B6VllKYT9