Finance Minister Nirmala Sitharaman has indicated that the government is open to reviewing the long-term capital gains (LTCG) tax regime ahead of the Budget 2027, amid growing calls for reform from investors and industry stakeholders.
FM Signals Possible Overhaul of LTCG Tax Regime
Finance Minister Nirmala Sitharaman has announced that the government is considering a review of the long-term capital gains (LTCG) tax framework ahead of the Union Budget 2027. The statement, made during a public address on October 13, 2026, comes amid sustained pressure from market participants, mutual fund investors, and financial institutions for rationalization of the current tax structure introduced in 2018.
The LTCG tax, currently levied at 10% (without indexation) on equity gains exceeding ₹1 lakh in a financial year, has been the subject of debate over its impact on market sentiment and investment behavior. The Finance Minister did not disclose specific contours of the proposed review but acknowledged concerns regarding double taxation and the need for competitive tax treatment to encourage retail participation in equity markets.
"We are listening to the market. The LTCG regime is under active consideration for possible recalibration in the next budget cycle."
While no legislative changes have been proposed yet, the statement may signal a preparatory phase for potential amendments in the Finance Act 2027. Practitioners should anticipate stakeholder consultations and possible expert committee recommendations in the coming months. Any modification to the LTCG regime could have wide-ranging implications for portfolio structuring, tax planning, and investor compliance.
