Scrapping LTCG Tax May Cost ₹50,000 Crore, But Govt Can Absorb Hit: SBI
What Happened
SBI Research said the government could abolish long-term capital gains (LTCG) tax without significantly disrupting fiscal consolidation, estimating the FY28 revenue hit at ₹40,000-50,000 crore, or about 0.1-0.2% of GDP. It also suggested raising the annual LTCG exemption from ₹1.25 lakh to ₹2 lakh and introducing lower rates for longer holding periods. To partly offset the loss, the report proposed a 50% increase in Securities Transaction Tax (STT), which it estimates could generate around ₹45,000 crore in FY28.
Key Takeaways
his is an SBI Research recommendation, not a government decision. The report argues that LTCG relief is fiscally manageable and could help attract foreign capital and improve investor sentiment.