Is India charging investors too much tax to stay competitive for global money

The debate has reopened. India taxes long term equity gains at 12.5 per cent above Rs 1.25 lakh a year, plus securities transaction tax on every trade. The Finance Minister said on 13 October that she is open to hearing views before Budget 2027, though she committed to nothing.

Timing explains the urgency. Foreign investors pulled out Rs 3.06 lakh crore from Indian shares in 2026 through 13 October. Global allocators compare after tax returns across markets, and several Asian peers charge nothing on listed equity gains. Paying both a transaction tax and a gains tax is unusual anywhere in the world.

Keep expectations grounded. The government collected roughly Rs 98,681 crore from this tax in a single year, so giving it up is costly. Foreign flows also depend on earnings, oil and the rupee, not tax alone. So avoid buying or selling on budget speculation and hold quality investments beyond twelve months.