Taxation on capital markets has been rationalised and need to live with that: SEBI Chief

SEBI chief Tuhin Kanta Pandey on Saturday signalled that taxation policies for the capital market are unlikely to be changed while underlining that there is certainty on taxation at present.
 
“If some certainties have already come in terms of taxation, let's not unsettle it. I think the point is we have to live with what the taxation is … which, I think is a reasonable one on the capital market side, and move with it,” said Tuhin Kanta Pandey, Chairman, Securities and Exchange Board of India (SEBI) at BT MindRush 2025.
 
“The taxation has been rationalised, and I think we have to live with that taxation,” he underlined.
 
The MSCI US dollar returns over the last five years is at over 11% for India while it is about 2% CAGR for emerging markets and -2% for developed markets, Pandey pointed out, highlighting that India has delivered robust US dollar returns for foreign portfolio investments (FPIs).  
 
He also highlighted that the Indian economy continues to do well delivering over 6% growth and is the fastest growing large economy, irrespective of economic uncertainties due to geo fragmentation or tariff issues. “Fundamentally, the markets will have to track the performance,” the SEBI Chief asserted.
 
His comments come at a time when FPIs have been steadily pulling out money from the Indian equities markets amidst global economic uncertainties and there have been calls to review tax rates on long term capital gains and securities transaction tax to arrest the market fall. The total outflow by FPIs from India since the start of 2025 is estimated at over Rs 1.3 lakh crore.
 
Underlining that FPIs are a very important part of the capital market landscape, Pandey noted that their investment flows have gone up in the last few years to India though there has been some volatility and uncertainty at present due to which there have been outflows.
 
Pandey said that any uncertainties created on the domestic front can be addressed and discussed. “If there are other obstacles in terms of any uncertainties which we create over and above, what the uncertainties are otherwise due to economic factors and the geopolitical and geo economic reasons, we are definitely prepared to discuss with them and address it,” he underlined.
 
Pandey also made a case for striking a fine balance in regulation noting that entities cannot be self-regulated but there has to be optimum regulation.
 
“If you do too less regulation…you remember, there was also a global financial crisis, and preceding that also, there was a thing that very light touch regulation was done. In fact, many commentators said that the regulation was extremely weak, and that led to whole systemic issues which went into how the global prices came in 2008,” Pandey cautioned.
 
In contrast, too much regulatory outreach can stifle innovation and increase compliance, he further said, adding that there is a need for striking a balance.

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