{"id":307642,"date":"2026-10-14T12:41:57","date_gmt":"2026-10-14T07:11:57","guid":{"rendered":"https:\/\/univest.in\/blogs-2\/?p=307642"},"modified":"2026-10-14T12:41:57","modified_gmt":"2026-10-14T07:11:57","slug":"ltcg-stt-is-it-opportune-time-for-fm-sitharaman-to-relook-at-taxation-to-contain-fiis-selling-in-indian-stock-market-sbi-research-fpi-outflows","status":"publish","type":"post","link":"https:\/\/univest.in\/blogs-2\/ltcg-stt-is-it-opportune-time-for-fm-sitharaman-to-relook-at-taxation-to-contain-fiis-selling-in-indian-stock-market-sbi-research-fpi-outflows\/","title":{"rendered":"LTCG, STT: Is It Opportune Time for FM Sitharaman to Relook at Taxation to Contain FIIs Selling in Indian Stock Market?"},"content":{"rendered":"

LTCG tax: SBI Research (Ecowrap, 12 Oct 2026) urges the government to abolish the tax on long-term equity gains and extend the holding period to 2-3 years to curb FPI outflows. FPIs sold Rs 44,166 crore in October so far and Rs 3.04 lakh crore in 2026 (2025: Rs 1.66 lakh crore). Current rate: 12.5% above Rs 1.25 lakh. Govt said in July it has no proposal to scrap it.<\/em><\/p>\n

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Quick Answer<\/strong><\/p>\n

SBI Research says the government should seriously consider abolishing LTCG tax on equity and extending the holding period to 2 to 3 years, to anchor hot money flows after FPIs withdrew Rs 3.04 lakh crore from Indian equities in 2026. This is a recommendation in the Ecowrap report dated 12 October 2026 and not a government decision, and existing rules still apply: 12.5% on gains above Rs 1.25 lakh after more than 12 months. The Minister of State for Finance told the Lok Sabha on 20 July 2026 that there was no proposal to abolish the levy for retail and domestic investors, and I could not find a newer government response. I also could not find an SBI proposal on securities transaction tax (STT) in the reports I read, so the STT section below only sets out the current rates.<\/p>\n<\/p><\/div>\n

The question behind the headline is whether a tax change can slow foreign selling and FPI outflows. LTCG tax on equity is paid by FPIs and by domestic investors alike, so any change would affect every investor who sells shares or equity funds after a year.<\/p>\n

This guide explains the SBI Research proposal, the FPI outflow numbers, the current tax and STT rates, what the government has said and what each outcome could mean. Where I calculate a figure myself, I label it.<\/p>\n

Nothing has changed in the law, so continue to follow the current LTCG tax rules until the government announces otherwise.<\/p>\n

Click Here – Get Free Investment Predictions<\/a><\/strong><\/p>\n

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