An industry body has urged the government to abolish long-term capital gains (LTCG) tax on equity investments, reduce short-term capital gains (STCG) tax from 20% to 10% and lower securities transaction tax (STT) rates in its pre-Budget recommendations submitted to Finance Minister Nirmala Sitharaman on November 10.
The industry body said rationalising capital market taxation would encourage long-term investments and improve India's competitiveness as an investment destination. The recommendations are part of the PHD Chamber of Commerce and Industry’s (PHDCCI) submission ahead of the Union Budget 2027-28.
The proposals come alongside a broader push by the industry body to improve access to equity financing for businesses, particularly micro, small and medium enterprises (MSMEs).
"We believe that ease of access to credit, equity support, rationalisation of taxation and strong implementation of Government schemes will foster faster growth of Indian industry as a global manufacturing hub," Ranjeet Mehta, Secretary General and Chief Executive Officer, PHDCCI, said.
PHDCCI has also called for direct government equity investment in MSMEs through the Fund of Funds Scheme, with dedicated allocations for start-up seed capital and participation in small and medium enterprise (SME) initial public offerings (IPOs).