- Samir Arora urged zero LTCG tax and 10% STCG tax to revive foreign fund inflows in India
- He dismissed minor LTCG tax tweaks for select investors as insufficient to boost market sentiment
- Arora highlighted the need for clear exit routes in equity markets for private equity investments
Helios Capital founder Samir Arora has urged the government to implement sweeping changes to the capital gains tax structure to revive foreign fund inflows into Indian equities. He suggested nil long-term capital gains (LTCG) tax alongside reverting short-term capital gains (STCG) tax to a 10% rate, arguing that mere tweaks will not help in reviving market sentiment.
Arora dismissed minor adjustments to LTCG tax for select investors, especially for Foreign Portfolio Investors (FPIs), as insufficient to revive the Indian equity market. He suggested bringing down the LTCG tax to zero for all investors in a recent post on X.
“Tweaks in LTCG tax for a small class of investors may not be enough to turn around sentiment. Need a substantial to 100% cut in LTCG for ALL investors and back to 10% type tax for STCG,” he wrote.
The founder of the Singapore-based asset management company noted that the country has no shortage of entrepreneurs who could attract private equity (PE) funding from both domestic and overseas investors. However, these funds require clear exit routes after a few years, which depend on buoyant equity markets facilitated by foreign institutional investors (FIIs), domestic institutional investors (DIIs), and retail participation.
“There are enough Indian entrepreneurs who can be funded by private equity (both Indian and foreign). However, those PE funds will invest only if there is exit visibility after a few years. That can be handled easily by FIIs and DIIs, and retail if equity markets are buoyant. It is all a big chain,” Arora said.
“If equity markets are weak, everything slows down and valuable years are wasted to reach the government's investments, GDP targets, etc.,” he added.
His remarks come amid ongoing debates over Budget 2026 proposals, where LTCG rates remain a flashpoint for investors. Ahead of the Union Budget for FY2026-27, scheduled to be presented in Parliament on Feb. 1, reports indicate the government is probably mulling tax incentives for foreign investors, with a possible change to the capital gains tax structure.
Social media has been abuzz with debate over tax on capital gains. One user wrote, “LTCG is here to stay. It's now broadly aligned with other asset classes, so a rollback looks unlikely.”
“LTCG is a better instrument for investors than STT and reverse for Traders - I believe maths would support it. In my opinion, if one class has to be passed on benefits, then it should be investors and maybe some benefit for traders via reduction in STT and STCG,” wrote another user.
In an earlier post on Jan. 12, Arora sharply criticised the idea of potential tax incentives for foreign pension funds and endowments in the upcoming Budget. He suggested that such measures "will not help at all and in fact will create more confusion."
Arora stressed that India urgently needs a swift reversal in the FII sentiment and flows to buoy equity markets. Long-term investors like pension funds respond slowly: first grappling with structural shifts (direct investments versus funds/ETFs), then delaying inflows by up to a year, he added.
"It is just easier to reduce/eliminate the taxes—perhaps just make LTCG zero beyond one year for all investors, including domestic investors," he advocated.
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