Is the government about to cut the tax on capital gains, or scrap LTCG on shares altogether? The question has been going round since 13 October 2026, when Finance Minister Nirmala Sitharaman was asked about it at the Bloomberg New Economy Forum in New Delhi. Markets read her answer as a hint. It is worth reading what she actually said before you change any buy or sell decision.
What the Finance Minister said
- Asked about long-term capital gains (LTCG) tax and securities transaction tax (STT), she said that with the Budget close, "it may not be the best time for me to say what I will or what I will not consider."
- She said investors in India and abroad have been debating how capital gains and different asset classes are taxed, and that the government is open to hearing their views.
- On the 2024 changes, she said the aim had been greater consistency across investment categories, "rather than simply increase taxes."
No change has been announced. There is no proposal, no draft bill and no notification. The current rates apply to every sale you make today. Any change would most likely come through the Union Budget in February 2027, and would normally apply only from the date set in the Finance Bill, not to sales already made.
Why the question is being asked now
- Foreign investors have been selling. NSDL data showed net equity outflows of about ₹2.67 lakh crore by early June 2026, already more than the ₹1.66 lakh crore for all of 2025.
- The rupee is weak. It fell about 10% in the year to June 2026, which cuts the dollar return of a foreign investor before any tax.
- Tax on trading went up this year. Budget 2026 raised STT on futures and options, and buyback proceeds are now taxed as capital gains.
Market bodies and some economists have argued that lower capital gains tax would bring foreign money back. Others point to the revenue the government would lose. The Finance Minister's answer kept both options open.
Capital gains tax rates today
These rates have applied since 23 July 2024 and continue under the Income-tax Act, 2025.
| Asset | Short-term | Long-term |
|---|---|---|
| Listed shares and equity mutual funds (STT paid) | Held up to 12 months: 20% | Held more than 12 months: 12.5% on gains above ₹1.25 lakh a year |
| Property, unlisted shares, gold and other assets | Held up to 24 months: taxed at your slab rate | Held more than 24 months: 12.5%, without indexation |
| Land or building bought before 23 July 2024 (resident individuals and HUFs) | — | Lower of 12.5% without indexation or 20% with indexation |
| Debt mutual funds bought on or after 1 April 2023 | Taxed at your slab rate, whatever the holding period | |
Surcharge and 4% health and education cess apply on top. For listed equity, the surcharge on capital gains is capped at 15%.
STT after Budget 2026
| Transaction | STT |
|---|---|
| Delivery equity, buy and sell | 0.1% on each side |
| Intraday equity, sell side | 0.025% |
| Futures, sell side | 0.05% (was 0.02%) |
| Options, sell side, on premium | 0.15% (was 0.1%) |
Unlike capital gains tax, STT is charged on every trade, whether you make a profit or a loss.
What a cut could look like
Nothing below has been proposed. These are the options people in the market are discussing:
- A higher exemption than ₹1.25 lakh for long-term equity gains.
- A lower LTCG rate, or a return to 10%.
- Removing LTCG on listed equity altogether, as was the case before 2018.
- Relief for foreign investors only, similar to the exemption recently given to FPIs on government securities.
- Lower STT, especially on delivery trades.
The details would matter as much as the headline: which assets are covered, the date it starts, and whether existing holdings qualify.
What investors should do now
- Don't delay a sale on speculation. If you need the money or want to rebalance, sell on today's rules. Holding on in the hope of a tax cut adds market risk for a benefit that may never come.
- Use the ₹1.25 lakh exemption every year. Booking long-term equity gains up to this limit before 31 March and reinvesting resets your cost at no tax.
- Book losses to set off gains. Short-term losses can be set off against both short-term and long-term gains; long-term losses only against long-term gains. Unused losses carry forward for eight years if you file your return on time.
- Watch the 12-month line. A share sold a few days before it completes 12 months is taxed at 20% instead of 12.5%.
- Pay advance tax on large gains. The next instalment is due on 15 December 2026. Gains booked during the year are part of your advance tax, and missing it attracts interest.
- F&O traders: the higher STT is now a fixed cost. Factor it into your strategy, and remember that F&O income is business income, often with a tax audit if turnover is high.
Our view
The Finance Minister did not promise a cut. She said she would listen. That is worth noting, given the pressure from FPI outflows and the rupee, but it is not a reason to change tax planning today. We will know in February 2027. Until then, plan with the rates in the table above.
How Vitt-Marg helps
We compute capital gains for shares, mutual funds, property and F&O, plan tax-loss and exemption harvesting before 31 March, work out advance tax on large sales, and file the right ITR with the capital gains schedule. If you are planning a large sale, talk to us before you sell. See our income tax consultant page.
General information, current as of October 2026, not advice for a specific case. GST and income-tax rules change often — check with us before acting on it.