Sensex Soars Following Finance Minister’s Comments on Potential LTCG Tax Reduction
NEW DELHI/MUMBAI: Finance Minister Nirmala Sitharaman expressed the government’s openness to discussions regarding the long-term capital gains (LTCG) tax during a recent event. She emphasized that engaging in such debates is beneficial, although she did not provide specific details as preparations for the Union Budget in February are already underway. Her comments have sparked optimism among investors about potential reductions in LTCG tax and securities transaction tax (STT), which have been longstanding requests from foreign funds that have significantly sold off Indian stocks in the past two years.
Following Sitharaman’s remarks, stock prices surged, with the Sensex closing up 1.5% or 1,109 points at 73,034, while the Nifty rose 1.6% or 359 points to settle at 22,722. The minister acknowledged that both domestic and foreign investors have raised concerns about the LTCG tax, noting that the treatment of various asset classes has been a topic of considerable discussion. So far this year, foreign portfolio investors (FPIs) have sold Indian stocks worth over Rs 3 lakh crore, compared to a net outflow of nearly Rs 1.7 lakh crore in 2025 and just Rs 427 crore in 2024.
RBI STEPS TO CHECK RUPEE VOLATILITY
In her address, Sitharaman also addressed the depreciation of the Indian rupee, stating that the Reserve Bank of India (RBI) is focused on reducing volatility rather than fixing the currency’s value. She assured that the RBI will take further measures to stabilize the rupee amid concerns over capital outflows linked to currency fluctuations. Sitharaman reiterated the government’s commitment to maintaining fiscal discipline, which she believes will reassure investors looking to diversify away from China.
She highlighted that domestic private capital is flowing into the market and attracting investments from abroad. As foreign funds continue to withdraw from India, a reassessment of market-related taxes could be timely. Hitesh Sawhney, a partner at Price Waterhouse, suggested that a zero tax rate on LTCG, tied to a longer holding period, could incentivize patient capital and enhance India’s appeal in the global capital market.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
