Gurmeet Chadha, CIO at Complete Circle, has urged Finance Minister Nirmala Sitharaman to extend the long-term capital gains (LTCG) tax tenure for equities to two years and make it tax-free. In a post addressing the finance minister, Chadha wrote, "Honourable FM Sitharaman, One request—increase tenure of LTCG for equities to 2 years & make tax nil. Let STCG tax remain as it is."
He argued that the move would significantly benefit India in the long run by attracting more foreign direct investment (FDI) and risk capital for infrastructure and public sector enterprises, ultimately leading to job creation. "We will gain immensely in long term in form of—FDI, risk capital to fund our capex, more value for PSUs n ultimately jobs," he noted.
Chadha suggested that in the short term, the government could compensate for revenue loss by increasing the Securities Transaction Tax (STT). "In short run higher STT will make up for revenue also," he added.
His remarks come amid growing criticism of India's capital gains tax policy. At the Business Standard Manthan Summit 2025, Helios Capital CIO Samir Arora called capital gains tax the "biggest mistake" of the government, particularly for foreign investors. He pointed out that FIIs have been aggressively selling Indian equities for five months, dumping stocks worth over ₹1 trillion in the last couple of months alone.
Arora also noted that India collected about $10-11 billion in capital gains tax in FY23 but argued that waiving it could improve market sentiment and foreign investment. "India should waive the capital gains tax to respect the markets and foreign investors," he said.
Concerns over taxation and foreign investor sentiment have coincided with a sharp downturn in Indian markets. On Friday, the Sensex plunged 1,414 points (1.9%) to 73,198, while the Nifty fell 420 points (1.86%) to 22,124. The sell-off wiped out nearly ₹9 lakh crore in market value, bringing the total market capitalization of BSE-listed firms down to ₹384.22 lakh crore.