Investor Vijay Kedia Urges Govt To Remove LTCG Tax, Says 12.5% Levy Hurts Long-Term Investors

Veteran investor Vijay Kedia has urged Finance Minister Nirmala Sitharaman to abolish long-term capital gains (LTCG) tax on listed equities.

Kedia shared his views in a post on X, saying long-term investors should not be treated like speculators. He said investors who stay invested in companies for many years help businesses grow, create jobs and support the economy.

Kedia Says Long-Term Investors Build Wealth

According to Kedia, long-term shareholders provide “patient capital” that companies need for expansion and innovation.

He argued that the government already earns taxes at several stages through corporate tax, GST, employee income tax, customs duty and stamp duty. Charging LTCG tax again on investors amounts to taxing the same value creation twice, he said.

Kedia also said India should encourage people to move savings from gold into equities. He believes stock market investments help build businesses and create employment, while gold remains mostly a passive asset.

Debate Around LTCG Tax Continues

LTCG tax on listed equities was reintroduced in 2018 after a gap of 14 years. Gains above Rs 1 lakh were taxed at 10 percent. In Budget 2024, the government increased the LTCG tax rate to 12.5 percent and raised the exemption limit to Rs 1.25 lakh.

Recently, Finance Minister Nirmala Sitharaman also said the government is open to hearing concerns from investors regarding LTCG and short-term capital gains tax rules.

However, the government has earlier clarified in Parliament that there is no proposal under consideration to abolish LTCG tax completely.

Investors Divided On The Proposal

Kedia’s comments have triggered discussion among investors and market experts.

Some investors believe removing LTCG tax could attract more long-term investments and improve market sentiment. Others feel the government may find it difficult to give up a major source of tax revenue.

Government data showed that LTCG tax collections from listed equities stood at nearly Rs 98,681 crore in FY23.