2 publishers · first seen Thu, 29 Oct 2026 13:54 UTC · updated Thu, 29 Oct 2026 14:01 UTC
The Indian government is considering a reduction in long-term and short-term capital gains tax rates for foreign portfolio investors (FPIs), including a potential FPI-specific long-term capital gains (LTCG) tax cut or computing gains in US dollar terms, to boost investor inflows and support the rupee, according to Jefferies. The move follows earlier tax relief for foreign investors in government securities, which led to $9 billion in FPI inflows into debt during June and July 2026.
Currently, FPIs face a 12.5 per cent LTCG tax and 20 per cent short-term capital gains (STCG) tax, higher than in several emerging markets where such gains are exempt. Equity LTCG tax collections were ₹1.3 lakh crore in FY25, contributing 8 per cent of direct tax revenue, requiring the government to balance revenue loss against investment gains. Jefferies noted that India is underweight in global emerging market funds, and financials, IT, and consumer staples have seen significant FPI outflows since 2024.
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