SEBI Urges India to Scrap 12.5% LTCG Tax for Foreign Investors as $31 Billion Exits Stocks
Updated
Updated · Reuters · Nov 2
SEBI Urges India to Scrap 12.5% LTCG Tax for Foreign Investors as $31 Billion Exits Stocks
3 articles · Updated · Reuters · Nov 2
Summary
SEBI has recommended that India remove the 12.5% long-term capital gains tax on foreign investors and ease tax rules for domestic mutual fund switches, according to two sources.
The push follows persistent foreign selling and weak market performance: overseas investors have pulled a record $31 billion from Indian stocks this year, while the Nifty 50 has fallen 4.8% over two years.
Foreign investors now face 12.5% tax on equity held more than a year and 20% on shorter holdings, alongside transaction taxes and dividend withholding that SEBI has said make India costly versus peers.
The proposals are part of SEBI's pre-budget submissions before February's federal budget and are not binding on the government, which will make the final decision.
Brokerages say a tax cut could improve returns and inflows: IIFL estimates scrapping capital gains tax would lift foreign investors' returns by 2.3 percentage points.