Sitharaman Says She Will 'Keenly Hear' Views on LTCG and STT as Markets Rise 1%

Finance Minister Nirmala Sitharaman said on Tuesday that she would keenly hear views on the long-term capital gains (LTCG) tax and the securities transaction tax (STT), but did not say whether either matter would be taken up during the preparations for Budget 2027.

Speaking at an event in Delhi, she said the LTCG tax was a subject on which many people had commented. "The long term capital gains tax is something on which a lot of people have been commenting, both the investors within India and also those who meet me occasionally outside in India," she said.

Several Ministers had also raised the issue of the STT, she added, arguing that it runs parallel to the LTCG tax and that India should impose one or the other. "So, it's healthy to have this debate and I will be keenly hearing them," Ms. Sitharaman said.

The LTCG tax is levied on the profit made from selling certain assets, such as shares or property, that have been held for a specified period. The STT is a tax collected on the value of securities traded on stock exchanges. Both are levied on market activity, which is why some argue that they overlap and should be reviewed together. Changes to either are normally announced in the Union Budget.

The stock market rose about 1% shortly after her remarks were reported. The Finance Minister announced no change in policy, and no decision on the two taxes has been made public. She also declined to comment on whether the issue would figure in the pre-budget consultations, saying only that preparations for Budget 2027 had started.

RBI to keep acting on rupee

On the exchange rate, Ms. Sitharaman said the rupee had reached a low and that the Reserve Bank of India (RBI) was making considerable efforts, using its regulatory powers, to keep the currency stable. "They are not trying to fix the rupee; they are trying to stop the volatility," she said, adding that she understood these efforts would continue and that the central bank would take further steps to ensure the rupee does not become too volatile.

Over the past few weeks, the RBI has announced several measures to shore up the rupee. The latest, announced on Saturday (October 10), was to redirect the dollar purchases of oil companies away from the spot market, along with tighter hedging rules.

Capital flows and AI investment

On capital outflows from India, the Finance Minister said economies around the world were seeing money flow to the United States, particularly towards frontier artificial intelligence (AI) development. She added that the more conventional AI development taking place within India should also be attractive to investors.

Her comments come at a time when global investors are weighing currency movements and tax treatment of market gains in deciding where to allocate funds. Any change to the LTCG or STT would be watched closely by domestic and foreign investors alike, though the government has so far given no indication of its intentions.