FICCI urged the Centre to remove the long-term capital gains tax on listed securities in the Union Budget for 2027-28. The industry body said the government could hike the securities transaction tax to offset revenue loss. They argued that both levies hurt equity returns and need a stable tax regime.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Centre to restore the long-term capital gains (LTCG) tax exemption on listed securities in the Union Budget for 2027-28. The industry body said the government could raise the securities transaction tax (STT) on delivery-based trades, if required, to offset the revenue impact. In its pre-Budget recommendations, FICCI said investors have faced both levies since the government reintroduced LTCG tax in 2018 while retaining STT. It argued that the two taxes reduce post-tax equity returns and called for the revised tax regime to remain in place for about 10 years to provide investors with greater certainty.

The 2018 Budget introduced a 10% tax on qualifying long-term capital gains exceeding Rs 1 lakh. The 2024-25 Budget raised the rate to 12.5% and increased the exemption threshold to Rs 1.25 lakh. It also raised the tax rate on qualifying short-term capital gains to 20%. SBI Research, in its latest report, has estimated that removing LTCG tax would cost the exchequer Rs 50,000 crore. FICCI separately proposed allowing foreign investors to calculate capital gains in the currency in which they originally invested. The industry body said rupee depreciation can leave overseas investors with a taxable gain in rupee terms even when the gain disappears after conversion into their original investment currency.

FICCI also urged the government to scrap the 0.1% tax deduction at source (TDS) on qualifying purchases of goods and e-commerce transactions between businesses. The industry body said these transactions are already captured through GST reporting and that the deduction ties up working capital and adds to reconciliation costs. The chamber called for extending the carry-forward of business losses and unabsorbed depreciation after mergers to all sectors, including services, organised retail and trading. It also sought relief for taxpayers whose first appeals have been pending for more than two years for reasons beyond their control.

FICCI proposed a full stay on disputed tax demands, a halt to recovery through refund adjustments and an interest waiver for the period of delay.