LTCG news: Sitharaman says she'll hear views on removing LTCG tax. Is it going?

Short answer: no, LTCG tax hasn't been removed. On Tuesday, 13 October, Finance Minister Nirmala Sitharaman said the government would listen to everyone who wants it scrapped or changed before the next Budget, and called the debate "healthy". She did not say she would change it. Until a Budget or a new law says otherwise, you pay 12.5% on long-term equity gains above ₹1.25 lakh a year.

What Sitharaman said

She was answering a question at the Bloomberg New Economy Forum in New Delhi. Her words, as reported by CNBC-TV18:

"We are very close to the budget and the preparation for the budget has started and it may not be the best time for me to say what I will or what I will not consider. So, I'll tread cautiously on that. But of course, the long-term capital gains tax is something on which a lot of people have been commenting, both, investors within India and also those whom it may occasionally outside."

She linked it to the securities transaction tax (STT), the small tax charged on every share trade, and recalled that some people had argued India shouldn't charge both STT and LTCG. On her 2024 changes, she said: "Two years ago, we had brought all asset classes similarly, and people thought I'm increasing the tax. I wasn't increasing the tax. I was bringing all of them to be at par with one another." She ended: "it's healthy to have this debate, and I will be keen to hearing them."

The Times of India's reading: she avoided any commitment. NDTV Profit's: she didn't rule out a change.

Why "LTCG news" is trending today

Two things landed within a day of each other:

• SBI Research's proposal (12 Oct). In its Ecowrap report, the research arm of India's largest bank said: "The Government must seriously look into anchoring hot money flows into equity segment by extending the holding period to say 2-3 years and abolishing the long term capital gains tax for equity" (ANI via ET BFSI). The worry is foreign portfolio investors (FPIs) selling Indian shares, which weakens the rupee. ANI quotes the report as putting FPI equity outflows in 2026 above ₹2.61 lakh crore, after ₹1.66 lakh crore in 2025; BusinessLine puts 2026 withdrawals at ₹3.04 lakh crore including the latest selling.
• The minister's answer (13 Oct). Investors read it as the government at least listening. NDTV Profit reported the Sensex rose about 650 points after her remarks, and CNBC-TV18 said markets extended their gains.

The LTCG rules today

The 12.5% rate and ₹1.25 lakh exemption came in the July 2024 Budget, up from 10% and ₹1 lakh (NDTV Profit). The 2026 Budget left them unchanged (BusinessLine). The new Income-tax Act took effect on 1 April 2026 and keeps the same rule in Section 198 (India Code).

A quick example. Say you sell equity mutual fund units this year after holding them for two years, with a total gain of ₹3,00,000. The first ₹1,25,000 is exempt. Tax is 12.5% of ₹1,75,000 = ₹21,875, plus 4% cess = ₹22,750. If LTCG on equity were abolished, that would be ₹0. Try your own numbers →

What would change if SBI's idea were adopted

SBI's proposal has two parts, and the second matters as much as the first:

1. No LTCG tax on equity, and
2. A longer holding period of "say 2-3 years" before a gain counts as long-term.

So it isn't a simple "share profits become tax-free". Upstox's reading is that the benefit would go to investors who hold for two to three years. SBI hasn't said how gains on shares held between 12 months and 2–3 years would be taxed under its plan. It is a recommendation from a bank's economists, not a government proposal.

Removing the tax would also cost the government revenue. NDTV Profit notes the fiscal cost of scrapping or cutting LTCG "would be significant", and that clearer signals are likely only from pre-Budget consultations with industry and investor groups over the coming months.

What you should do now

• Don't change your plans on a rumour. Every sale you make today is taxed under the current rules, whatever happens in February.
• Use this year's ₹1.25 lakh exemption. If you have long-term gains, booking up to ₹1.25 lakh of them in a financial year (and reinvesting, if that suits you) keeps them tax-free. This is often called tax harvesting. Brokerage, STT and exit loads still apply.
• Know your holding dates. Selling a day before the 12-month mark turns 12.5% into 20%.
• Watch the Budget on 1 Feb 2027. That's where any change to LTCG or STT would normally be announced. We'll update this story if the government says anything more specific.