Sitharaman signals openness to reconsidering LTCG tax framework

Finance Minister Nirmala Sitharaman has kept the door open for a potential rethink on long-term capital gains (LTCG) tax policy, signaling that the government remains receptive to stakeholder feedback as it prepares the 2027 budget.

Sitharaman acknowledged that market participants have raised substantive questions about whether all asset classes should be subject to identical tax treatment under the LTCG framework. The concerns centre on whether the existing tax structure adequately differentiates between various investment categories, including equities, real estate, and other securities.

The Finance Minister said the government will give careful consideration to these representations from industry and market participants. Her remarks suggest that policy adjustments could form part of Budget 2027 deliberations, though no specific commitments have been made regarding changes to the current LTCG tax regime.

The LTCG tax, introduced in the 2018 budget, applies a 20 percent levy on capital gains accrued over assets held for more than a year. The announcement comes at a time when investors and market practitioners have intensified calls for greater flexibility in how different asset classes are taxed under the long-term holding framework.