Sebi seeks tax relief for foreign and domestic equity investors

The Securities and Exchange Board of India has put forward proposals to provide tax relief across two key investor categories, signalling efforts to attract foreign capital and enhance the domestic mutual fund ecosystem. The recommendations include scrapping long-term capital gains tax on equity investments by foreign portfolio investors, a move designed to level the playing field with competing markets in the region. Simultaneously, Sebi has suggested offering tax concessions to Indian mutual fund investors who transition between different schemes, a measure intended to improve scheme portability and reduce tax-related switching friction. The regulator's dual approach addresses concerns that existing tax structures may disadvantage India's equity markets relative to alternative investment destinations. If implemented, the proposals would require coordination between Sebi and the finance ministry, as tax policy falls under the government's purview. Market analysts suggest the measures could encourage sustained foreign inflows into Indian equities while making the mutual fund market more flexible for domestic savers. The proposals reflect broader efforts by Indian regulators to enhance market depth and liquidity at a time of intensifying regional competition for investment flows.