Market participants seek equity tax relief ahead of Budget

Market Participants Seek Equity Tax Relief Ahead of Budget

Market participants are calling on the government to provide much-needed relief in capital market taxation as the Union Budget for 2026-27 approaches. Key demands focus on enhancing the exemption limit for long-term capital gains (LTCG) from equity investments.

Key Recommendations for Equity Tax Relief

– Increase LTCG Exemption Limit: Stakeholders are advocating for the tax-free exemption limit for equity LTCG to rise from Rs 1.25 lakh to Rs 2 lakh, allowing retail and long-term investors more breathing room.
– Avoid Transaction Tax Hikes: Participants are urging the government to refrain from increasing transaction-related taxes to sustain market growth.
– Standardize Long-Term Definition: JM Financial Services proposes defining long term uniformly across asset classes—including equity, debt, gold, and real estate—for clearer tax guidelines.
– Capital Loss Offsetting: The ability to set off capital losses against income from other sources is a desired addition to the current tax framework.
– Securities Transaction Tax (STT) Adjustments: Dhiraj Relli, MD and CEO of HDFC Securities, suggests keeping STT on cash equity trades lower than that on derivatives, promoting long-term investment over speculation.

Voices from the Market

Tejas Khoday, CEO of FYERS, emphasizes that reducing both long-term and short-term capital gains tax to 10% would significantly encourage retail investor participation. There is also a collective hope among stakeholders that import duties on gold and silver will remain stable, as these assets are crucial for hedging against market volatility and currency depreciation.

Upcoming Budget Presentation

The Union Budget will be unveiled by Finance Minister Nirmala Sitharaman on February 1. On this date, the NSE and BSE are set to conduct live trading, further heightening market anticipation.

In summary, the push for equity tax relief is centered on increasing the LTCG exemption limit, avoiding transaction tax hikes, and creating a more favorable regulatory environment for investors. As market participants look forward to the upcoming budget, the aim is to foster a healthier investment landscape and drive more retail participation.