LTCG tax relief on cards? FM acknowledges FPI concerns as SEBI, FICCI push for reforms in Budget 2027

**FM Signals Openness on Capital Gains**

Finance Minister Nirmala Sitharaman has acknowledged the concerns of foreign portfolio investors and equity market participants regarding India's investment environment. Speaking at the Financial Express Leadership Awards 2026, she said the government recognises changing global circumstances and will factor in stakeholder feedback as it works to sustain economic growth of around 7 per cent. Her remarks come amid rising foreign investment outflows, even as she noted that inflows have begun recovering.

**Why This Matters for Business**

Industry body FICCI has urged the finance ministry to consider exempting long-term capital gains (LTCG) tax for listed companies, establish a capital gains regime stable for a decade, revise taxation rules for foreign investors, and remove certain tax deduction at source provisions in the upcoming Budget. FICCI has argued that since LTCG tax was reintroduced in 2018 without withdrawing the securities transaction tax, listed equities face dual taxation. Market regulator SEBI has reportedly asked the government to examine whether LTCG tax on foreign investors' equity investments can be removed, and whether domestic mutual fund investors can receive relief when switching between schemes.

The Finance Minister observed that taxation is only one element in attracting foreign investment, noting the current tax structure resembles that of 2023-24, when India attracted strong foreign capital. She said circumstances have since changed and challenges have grown. She added that India needs capital, particularly equity investments, to maintain growth momentum, and while the government has focused on deepening the bond market, concerns are now being raised about greater support for equity markets. On the domestic front, she cited recent GST collection data to argue that India's consumption story remains intact, with next-generation GST reforms improving demand visibility and encouraging selective private i…