Equity Transactions Yielded ₹1.29 Lakh Crore Revenue in AY 2025-26 from LTCG Tax

On July 20, 2026, The Indian government has confirmed there is no ongoing proposal to abolish Long Term Capital Gains (LTCG) tax on equity investments.  

Minister of State for Finance, Pankaj Chaudhary, clarified this in a written reply, indicating that while tax policies are reviewed regularly, the LTCG tax remains unchanged, as per The CNBCTV18 news report. 

LTCG Tax Revenue from Equities 

The Finance Ministry shared data revealing that LTCG tax on equity transactions resulted in collections of ₹72,249 crore for Assessment Year (AY) 2024-25, corresponding to Financial Year (FY) 2023-24, and ₹1.29 lakh crore for AY 2025-26, relating to FY 2024-25. Cumulatively, these renderings have amounted to over ₹2 lakh crore. 

LTCG Tax Rate Consistency 

Questions were raised in Parliament regarding whether Foreign Portfolio Investors (FPIs) enjoy exemptions on LTCG tax while domestic investors do not.  

The government confirmed that the LTCG tax rate of 12.5% applies uniformly to FPIs, domestic investors, and retail investors. However, the Income-tax (Amendment) Ordinance, 2026, alters tax treatment solely for FPI investments in Government Securities (G-Secs). 

Read More: ICICI Prudential Life Insurance Share Price Gains Over 3% After Q1 FY27 Earnings Results: Total Income Up 12.1% YoY! 

Exemption for FPIs in G-Secs 

Starting April 1, 2026, the tax exemption for FPIs on interest or capital gains from G-Secs aligns Indian taxation with comparable jurisdictions, aiming to draw stable foreign capital from entities like pension funds and sovereign wealth funds. 

Details on LTCG Tax 

LTCG tax pertains to gains made from listed equity shares and equity-oriented mutual funds held for over 12 months. This tax was set at 12.5% without indexation adjustments, post amendments in the Union Budget 2024. Data for AY 2026-27 and AY 2027-28 remains unavailable as corresponding income tax returns are yet to be filed. 

Conclusion 

The Indian government maintains no current proposal to scrap the LTCG tax on equities. Revenue generated from this tax surpassed ₹2 lakh crore for AY 2024-25 and AY 2025-26 combined. The 12.5% tax rate applies to all investor categories, and exemptions for FPIs are limited to G-Secs. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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