Scrap LTCG to Boost Equity Investments, Says Raghav Chaddha

New Delhi: AAP MP Raghav Chaddha has urged the government to abolish the Long-Term Capital Gains (LTCG) tax on equities, arguing that it would encourage more citizens to invest in the stock market. Chaddha cited several countries, including Switzerland, Singapore, UAE, Hong Kong, New Zealand, Qatar, and Malaysia, where long-term equity gains are largely tax-free.

Zero Tax on Long-Term Gains

Speaking during the Budget 2026-27 discussion in the Rajya Sabha, Chaddha said removing LTCG would increase the wealth of ordinary investors. It would also incentivize them to invest in equities rather than traditional avenues like gold, silver, or real estate. “The LTCG tax on equities for retail investors should be set to zero,” he said.

Warning on Investor Sentiment

Chaddha also criticized the recent increase in Securities Transaction Tax (STT). Originally introduced to replace LTCG tax when equity gains were tax-free, STT applies on every trade, whether profitable or at a loss. While he welcomed the higher STT on derivatives, he cautioned that maintaining both STT and LTCG could discourage genuine long-term investors.

Global Comparisons

Highlighting global best practices, Chaddha pointed out that many countries do not tax long-term gains on equity for retail investors. He also praised the government for raising investment limits for Non-Resident Indians (NRIs) but urged authorities to investigate why Foreign Institutional Investors (FIIs) are exiting India, noting that nearly $23 billion was withdrawn in the last financial year.

Budget Critique

Chaddha further criticized Budget 2026 for failing to revise income tax slabs, which he described as a setback for salaried middle-class taxpayers. He also expressed concern over the low allocation for public healthcare.