Is LTCG tax on shares being removed? What the government said in October 2026
LTCG tax on shares and equity funds has not changed. The Finance Minister said on 13 October 2026 she will hear views before Budget 2027-28.
Many investors are asking whether the tax on long-term gains from shares is going away. The short answer: nothing has changed yet. Here is what was said, what the rules are today, and when a change could come.
What was said
- 13 October 2026. Speaking at the Bloomberg New Economy Forum in New Delhi, Finance Minister Nirmala Sitharaman said investors in India and abroad had raised long-term capital gains (LTCG) tax and the securities transaction tax (STT) with her. She said she was keen to hear their views during the consultations for the Union Budget 2027-28, as reported by Akashvani News and Mint. She also said it was too close to the Budget to say what she would or would not consider.
- Same day. A senior government official told Moneycontrol that the Centre has received proposals to review LTCG tax on equity and is examining them.
- 12 October 2026. SBI Research, the research unit of State Bank of India, suggested scrapping LTCG tax on shares and raising the holding period for long-term gains to 2 or 3 years, to draw foreign investors back, as reported by Mint.
None of this is a decision. The Finance Minister did not name a new rate, a date or a holding period.
What the government said earlier
On 20 July 2026, Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that there was no proposal to abolish LTCG tax for domestic or retail investors, as reported by Mint. He said capital gains tax rates are reviewed through the yearly Budget.
The rules today
For listed shares and equity mutual funds:
- Long-term gains (held for more than 12 months): the first ₹1.25 lakh of gains in a financial year is tax-free. Gains above that are taxed at 12.5%, plus 4% cess. These rates apply to sales from 23 July 2024.
- Short-term gains (held for 12 months or less): taxed at 20%, plus cess.
- STT is charged on every buy or sell on the exchange, whether you make a profit or not.
Example. You sell shares held for two years at a gain of ₹2 lakh in October 2026. The first ₹1.25 lakh is exempt. Tax is 12.5% of ₹75,000, which is ₹9,375, plus 4% cess of ₹375, so ₹9,750 in all.
When a change could come
Tax rates are usually changed in the Union Budget, which is normally presented on 1 February. A change announced in the Budget for 2027-28 would usually apply from a date stated in it. Until a change is passed into law, the current rules apply to every sale you make.
What it means for you
- Do not sell or hold back a sale only because of reports about LTCG tax. The rules today are the ones that apply.
- If you plan to book long-term gains this year anyway, you can use the ₹1.25 lakh tax-free limit before 31 March 2027.
- We will update this guide if the government announces a change.
Before you decide
Saifu is not a SEBI-registered investment adviser. This guide explains tax rules and official statements. It is not advice to buy or sell any share or fund. Investments in shares and mutual funds are subject to market risk.
Sources: Akashvani News: Govt open to hearing suggestions on LTCG tax, says FM Sitharaman, 13 October 2026, Moneycontrol: Centre examining proposals to review LTCG tax on equities, says senior government official, Mint: LTCG tax removal on the table? FM Sitharaman says Budget consultations will hear investors' views.
Rules, rates and limits change. Check the official source linked above before you rely on a figure here. Posts never contain referral or affiliate links from the writer.
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