Vijay Kedia Urges Government to Abolish LTCG Tax on Equities Ahead of Budget 2026

Key Takeaways

• Vijay Kedia, a seasoned investor, has appealed to Finance Minister Nirmala Sitharaman to scrap the Long-Term Capital Gain (LTCG) tax on listed equities. He explained that long-term investors bring patient risk capital into business rather than speculative gains.
   
• In Budget 2024, the government has increased the LTCG tax on equities to 12.5%, with an exemption limit of ₹1.25 lakh. The government has already clarified that there is no plan for scrapping such a tax.

Why This Tax Debate Deserves Your Attention Right Now?

Veteran investor Vijay Kedia made a post on X on May 27, 2026, to Finance Minister Nirmala Sitharaman, requesting that the LTCG tax be removed from listed stocks. This is because investors in stocks are wealth creators and not speculators. 

In the short term, this debate matters for crores of retail investors planning equity investments. In the long term, how India taxes patient capital will shape whether domestic savings flow into productive businesses or stay in gold.

How This Affects the Common Indian Investor?

India’s household savings are still heavily parked in gold and fixed deposits. Kedia argues that tax policy should encourage people to move savings from passive assets like gold into productive businesses that create jobs.

The current 12.5% LTCG tax reduces real returns for a salaried investor holding stocks for 3 to 5 years. This discourages the very behaviour that builds long-term wealth for ordinary citizens.

What Experts Say and What Could Actually Work?

Critics say removing the LTCG tax altogether could lead to fairness issues in the wider tax system and reduce an important source of government revenue. 

The government earned ₹98,681 crore in FY22-23 from LTCG, which was 15% higher than the previous year. 

Scrapping it entirely is a big revenue ask.

However, Kedia’s argument has a valid core. He points out that during a company’s growth, the government already collects corporate tax, GST, income tax from employees, customs duties, and stamp duties. 

Taxing the long-term investor on top of this does look like double taxation. A middle path, such as extending the holding period for full exemption or reducing the rate for holdings beyond 5 years, could balance investor incentives with fiscal needs.

Conclusion

Vijay Kedia’s call is loud and clear. India must choose between taxing patient capital and growing it. Finance Minister Sitharaman has said the government is open to hearing investor concerns on capital gains tax. With Budget 2026-27 approaching, this debate is well timed. Whether the government acts or not, investors should factor this tax reality into their long-term plans today.

FAQs 

What profit can I make before I have to pay tax with the LTCG tax now at 12.5%?

Long-term capital gains in excess of ₹1.25 lakh per financial year from listed shares and equity mutual funds are exempt from tax under current norms. Any earnings in excess of ₹1.25 lakh are taxed at 12.5% above this limit.

Does the government intend to withdraw the LTCG tax on stocks/equity mutual fund investments?

So far, there have been no reports or indications from the government that they intend to remove the LTCG tax. Although investor Vijay Kedia has appealed for this, the government has clarified in its earlier statement that there are no plans for scrapping it.