Pre-Budget 2026: Capital-Market Leaders Pitch Tax Tweaks, Higher Retail Participation At Pre-Budget Meet

Prominent capital-market participants have put forward a set of key policy recommendations to the finance minister during the pre-Budget consultations, focusing on tax rationalisation and boosting household participation in equities, sources told NDTV Profit.

One of the core suggestions according to the sources was to ensure that the securities transaction tax (STT) on cash equity trades remains lower than on derivatives, to incentivise long-term investing over speculative activity.

Another major theme was the need to raise household savings in equities from the current 5% to 8%. The participants also called for a significant change in the buyback tax structure. They recommended that the tax be levied only on the profit component of a buyback rather than the entire amount, a shift they believe would encourage more companies to return capital to shareholders efficiently.

A notable disparity in tax treatment of dividends also came under scrutiny. Stakeholders proposed aligning the short-term dividend tax rate for domestic investors with that of NRIs, sources added. Currently, NRIs pay 20% on short-term dividends, whereas domestic investors can face rates of up to 42%, depending on their tax slab.

The Finance Ministry is expected to examine these suggestions as it finalises the Union Budget proposals.

Union Finance Minister Nirmala Sitharaman chaired the fourth round of pre-Budget consultations with stakeholders as part of preparations for the Union Budget 2026–27. The meeting, held in New Delhi, was attended by Union Minister of State for Finance Pankaj Chaudhary, Department of Economic Affairs Secretary Anuradha Thakur, and Chief Economic Adviser Dr. V. Anantha Nageswaran.

Sources to NDTV Profit revealed that several prominent names from the financial sector were present at the meeting, including Sandeep Sikka, Saurabh Mukherjea, Motilal Oswal, Sushant Bhansali, Dhirendra Kumar, and Vishal Kapoor.

The consultation with market representatives follows the first round of pre-Budget meetings held on Monday, where Sitharaman engaged with leading economists and agriculture sector representatives to gather insights on growth, investment, and fiscal priorities.