SEBI Proposes Removing LTCG Tax for Foreign Investors

India's markets regulator has advised the government to eliminate the long-term capital gains tax for foreign investors, according to reports citing knowledgeable sources. The recommendations are part of private pre-budget submissions ahead of the February federal budget, though the final decision rests with the government.

Over the past two years, India's equity markets have lagged behind emerging market peers, with foreign investors offloading a record $31 billion in Indian stocks this year. Regulators hope the proposed tax changes will lower upfront burdens and address feedback gathered from multiple meetings with foreign participants.

Additionally, the Securities and Exchange Board of India has recommended tax relief for domestic mutual fund investors. Under the suggestion, selling existing holdings to reinvest in new funds would be exempt from long-term capital gains taxes provided the units were held for over a year.