New Delhi, Nov. 2 -- Persistent foreign selling of Indian equities has revived demands to reduce or abolish long-term capital gains (LTCG) tax. Another proposal is to keep the tax but impose it only on the foreign investor's dollar gains. This would ensure their taxes get reduced to the extent rupee depreciation eats into their profits.

These demands arise from a genuine concern about weakening capital inflows and the consequent pressure on the rupee. But surrendering a substantial revenue stream would leave the underlying causes of rupee pressure largely untouched.

LTCG tax revenue yielded Rs.1.29 trillion in 2024-25, up from Rs.72,249 crore the previous year. These collections came both from domestic and foreign investors. Hence, any ...