Nirmala Sitharaman Sidesteps LTCG and STT Changes Ahead of Upcoming Budget
Union Finance Minister Nirmala Sitharaman stated on Tuesday that the government has not yet decided on potential changes to the long-term capital gains (LTCG) tax or the securities transaction tax (STT). She emphasized that it is premature to comment on these matters as preparations for the upcoming Union Budget are underway. Sitharaman made these remarks during the Bloomberg New Economy Forum 2026, acknowledging ongoing discussions among investors regarding capital gains taxation.
SBI Research proposes scrapping LTCG tax on equities
SBI Research has urged the government to consider abolishing the LTCG tax on equity investments and extending the holding period for these investments to two or three years. The report argues that such measures could help stabilize foreign capital flows into the equity market. It comes in light of significant foreign portfolio investor (FPI) selling, with foreign investors reportedly withdrawing Rs 44,166 crore from Indian equities in October alone, bringing total withdrawals for 2026 to Rs 3.04 lakh crore. Currently, the LTCG tax rate for foreign investors stands at 12.5 percent, a rate retained in the Union Budget 2026.
In addition to the LTCG tax proposal, SBI Research has called for simplifying the repatriation of export earnings and providing clearer guidelines on withholding tax related to external commercial borrowings.
Sitharaman says RBI focused on curbing rupee volatility
During the same event, Sitharaman addressed the depreciation of the Indian rupee against the US dollar. She noted that the Reserve Bank of India (RBI) is focused on minimizing excessive volatility rather than fixing the currency at a specific level. The finance minister attributed the rupee’s decline over the past 18 months to external pressures but affirmed that India’s economic fundamentals and foreign exchange reserves remain robust. The RBI has implemented measures to support the rupee, including a special window for oil marketing companies to meet dollar demand outside the spot market.
Sitharaman’s comments followed recent RBI actions aimed at curbing pressure on the domestic currency, which included tighter rules for foreign exchange derivatives trading. Following these measures, the rupee appreciated to Rs 94.96 against the US dollar in early trade on Tuesday.
Finance minister highlights investment opportunities
Sitharaman also discussed various investment opportunities in sectors such as infrastructure, semiconductors, and renewable energy. She defended India’s strategy of developing both advanced semiconductor chips and those used in everyday applications. The finance minister emphasized the need for substantial electricity generation and reliable power infrastructure to support the expansion of artificial intelligence and data centers.
The National Infrastructure Pipeline has reportedly grown to over USD 4.5 trillion, presenting opportunities across multiple sectors and regions. Sitharaman highlighted the role of the National Bank for Financing Infrastructure and Development and the National Investment and Infrastructure Fund in mobilizing long-term capital. She noted that domestic private investment is gaining traction in areas like renewable energy, pharmaceuticals, and civil aviation, which is currently growing at around 16 percent.
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