File photo: Union finance minister Nirmala Sitharaman
Union finance minister Nirmala Sitharaman on Tuesday declined to indicate whether the government would make changes to long-term capital gains (LTCG) tax or securities transaction tax (STT), saying it was too early to comment as preparations for the upcoming Union Budget had begun.Replying to a question at an event, Sitharaman said investors in India and abroad had been discussing the taxation of capital gains and different asset classes and the government was open to hearing their views.“We are very close to the budget and the preparation for the budget has started, and it may not be the best time for me to say what I will or what I will not consider,” she said at the Bloomberg New Economy Forum 2026, as cited by news agency ANI.Her remarks come a day after a report by SBI Research proposed abolishing LTCG tax on equity investments to encourage longer-term investments and help stabilise foreign capital flows.
SBI Research proposes scrapping LTCG tax on equities
SBI Research has called on the government to consider extending the holding period for equity investments to two or three years while abolishing LTCG tax on equities.“The government must seriously look into anchoring hot money flows into equity segment by extending the holding period to say 2-3 years and abolishing the long-term capital gains tax for equity,” the report said.
The proposal comes amid sustained foreign portfolio investor (FPI) selling in Indian equities.According to figures cited in the report, foreign investors sold shares worth Rs 44,166 crore in October up to the time of publication, taking their total equity withdrawals in 2026 to Rs 3.04 lakh crore.The current LTCG tax rate for foreign investors on equity investments is 12.5 per cent. The Union Budget 2026 retained this rate for listed shares and equity mutual funds, continuing the framework introduced in 2024.SBI Research also called for simplifying the repatriation of export earnings, suggesting a reasonable timeframe of around six months, and sought greater clarity on withholding tax applicable to external commercial borrowings.
Sitharaman says RBI focused on curbing rupee volatility
At the event, Sitharaman also addressed the rupee's depreciation against the US dollar, saying the Reserve Bank of India (RBI) was focused on limiting excessive volatility rather than fixing the currency at a particular level.She acknowledged that the rupee had depreciated significantly over the past 18 months, attributing much of the pressure to external challenges. She said India's economic fundamentals and foreign exchange reserves remained sound.“They are not trying to fix the rupee. They are trying to stop the volatility. And for that, there is a lot of effort from the RBI side. So, these efforts from the RBI... will continue not to...fix
the rupee. We would appreciate it if the rupee finds its own (value),” she said, according to news agency PTI.Sitharaman's comments followed a series of measures announced by the RBI to curb pressure on the domestic currency. These included a special window for oil marketing companies to meet dollar demand outside the spot market and tighter rules for foreign exchange derivatives trading.The central bank also introduced a reserve requirement linked to certain dollar purchases.The measures supported the rupee, which rose around 1 per cent on Monday. The currency appreciated to Rs 94.96 against the US dollar in early trade on Tuesday.“I'm sure there are efforts which the RBI would take further to make sure that the rupee doesn't become too volatile,” Sitharaman said, adding that India's economic fundamentals remained sound.She also reiterated the government's commitment to fiscal discipline and macroeconomic stability, while maintaining spending priorities in welfare, education and healthcare.
Finance minister highlights
Sitharaman also outlined investment opportunities in infrastructure, semiconductors, renewable energy and emerging technologies.On semiconductor manufacturing, she defended India's approach of developing both advanced chips and those used in everyday applications, including refrigerators, automobiles, industrial machinery and Internet of Things devices.She said the expansion of artificial intelligence and data centres would require substantial electricity generation, reliable power infrastructure and sustainable sources of green energy.Investments in transmission networks and renewable energy would be important to meet these requirements.The finance minister said the National Infrastructure Pipeline had grown to more than USD 4.5 trillion, offering opportunities across sectors and regions.She also highlighted the role of the National Bank for Financing Infrastructure and Development and the National Investment and Infrastructure Fund in mobilising long-term capital.Sitharaman further said domestic private investment was gaining momentum in areas including renewable energy, semiconductors, pharmaceuticals and aircraft maintenance, repair and overhaul facilities.She noted that India's civil aviation sector was growing at around 16 per cent, creating additional investment opportunities in aviation-related infrastructure and services.