Under the present rules, an investor can earn long term capital gains (LTCG) of up to Rs 1.25 lakh in a year without paying any tax, and the gains above that amount are taxed at 12.5%. Short term gains on certain financial securities are taxed at 20%. Before the 23 July 2024 Budget, the LTCG rate was 10% and the exemption was Rs 1 lakh, while the short term rate was 15%.
Many investors are now discussing about the LTCG tax in Budget 2027, as the Union Budget for 2027-28 is expected on 1 February 2027. Alongside this, securities transaction tax (STT) has been 0.05% on futures and 0.15% on options from 1 April 2026.
This article is based on what people are discussing on forums and social media and on public reports. Nothing here is confirmed and Scripwise takes no responsibility for any decision made on it.
What investors are asking for
| Item | Rule today | What investors ask for |
|---|---|---|
| LTCG rate | 12.5% | Return to 10% |
| LTCG exemption | Rs 1.25 lakh | A higher limit |
| STCG rate | 20% | No firm ask noted |
| STT | 0.05% on futures, 0.15% on options | Views awaited |
Others are asking that the yearly exemption limit be raised, so that more small investors can book gains without paying any tax. Both asks are unconfirmed.
SBI Research has taken it a step further and suggested that LTCG on equities should be abolished. This idea comes from a research team, not from the government itself. Nothing has been confirmed yet.
For STCG; STT, there is no firm demand mentioned in the reports and investors are waiting to see whether these will be discussed at all.
What the Finance Minister has said
The Finance Minister has said that the government will hear views on LTCG and STT ahead of Budget 2027-28. Many investors and market participants are reading this statement closely, and some of them are treating it as a sign that a change may follow.
However, hearing views is only a step in the usual pre-Budget process and it is not a commitment to act on any of them. No cut in the LTCG rate has been announced, and no abolition of the tax on equities has been announced either. The Finance Minister has also not indicated whether the exemption limit will be looked at.
For the present, individual investors are continuing to plan their sales and holdings under the rules that are in force.
These are expectations, not announcements.
