Indian equity investors saw their wealth swell by around Rs 1.7 lakh crore as benchmark indices extended their recovery on Tuesday after Finance Minister Nirmala Sitharaman said the government was open to hearing views on the removal of long-term capital gains (LTCG) tax and changes to the securities transaction tax (STT).
Speaking at the Bloomberg New Economy Forum in New Delhi, Sitharaman talked about the growing debate among domestic and foreign investors over the taxation of equity investments and the treatment of different asset classes.
“LTCG, a lot of people are commenting on, both Indian and foreign investors,” she said. “This debate on STT in market and question of treating all asset classes similarly, there is a lot of debate. It is healthy to have this debate.”
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Her remarks come amid continued discussions around the tax burden on equity investors, particularly after the government raised STT rates on equity derivatives in the Union Budget 2026.
Following the comments, the Nifty 50 and the Sensex extended their gains beyond 1%. The Nifty, which had struggled to cross the 22,600 mark through the session, moved past that level and briefly crossed 22,700 intraday.
Capital market stocks, including BSE, CDSL and NSDL, also gained following the Finance Minister's remarks.
Currently, equity investments held for more than 12 months attract LTCG tax at 12.5%, with an annual exemption of Rs 1.25 lakh on eligible gains.
In Budget 2026, the government raised STT on equity futures to 0.05% from 0.02%. The rate on options premiums was increased to 0.15% from 0.1%, while STT on exercised options rose to 0.15% from 0.125%.
While Sitharaman did not announce any immediate policy change, her comments indicate that the government is willing to hear stakeholder views as part of the Budget consultation process.
Beyond capital markets, Sitharaman highlighted growing private investment in renewable energy, semiconductors, chip design and packaging, data centres, transmission infrastructure, green hydrogen and green ammonia.
“It is not just AI, but also semiconductors, the semiconductor chips and design and packaging. India is moving into areas which are going to enable AI,” she said.
The Finance Minister also pointed to investments in biosimilars, drug manufacturing and maintenance, repair and overhaul (MRO) facilities, adding that India's civil aviation sector was growing at around 16%.
On infrastructure, she said the National Infrastructure Pipeline, launched in late 2019, had crossed $4.5 trillion. She also cited the role of the National Bank for Financing Infrastructure and Development (NaBFID) and the National Investment and Infrastructure Fund (NIIF) in mobilising capital.
“The last 10 years, every sector that required a build up, India has done immensely well. This momentum will continue,” she said.
Sitharaman said currency depreciation was being driven by several factors, most of them external, while reiterating that India's macroeconomic fundamentals remained sound. She also pointed to measures being taken by the Reserve Bank of India to manage currency volatility.
On fiscal discipline, the Finance Minister said the subject was close to Prime Minister Narendra Modi's heart, adding that he had pursued fiscal prudence even during his tenure as Gujarat chief minister. She said fiscal discipline should not be a source of concern for investors.
For equity market participants, the immediate focus will remain on whether the issues raised by investors find a place in future Budget discussions. Sitharaman's remarks, however, do not amount to a commitment to remove LTCG tax or reduce STT.
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