Investors Call for Capital Tax Reforms in Upcoming Budget

Ahead of the Union Budget 2026-27, market participants have urged the government to ease capital market taxation, including raising the exemption limit on long-term capital gains. They recommend standardized definitions for 'long term' and tax policy revisions to enhance retail investor participation and simplify investment processes.

Market participants are calling on the government to relax capital market taxation measures in anticipation of the Union Budget for 2026-27. Among the demands is an increase in the exemption limit for long-term capital gains, which stakeholders believe will offer greater relief to retail and long-term investors.

With Finance Minister Nirmala Sitharaman scheduled to present the budget on February 1, industry experts like JM Financial Services are recommending that the tax-free exemption limit for equity long-term capital gains be raised from Rs 1.25 lakh to Rs 2 lakh. Such reforms aim to simplify taxation across all asset classes, enabling better tax clarity.

Stakeholders, including Heads of firms like HDFC Securities and FYERS, advocate for a more encouraging tax environment by suggesting these changes promote sustainable investment over speculative trading, and caution against further tax hikes that might deter retail investors.

(With inputs from agencies.)