Abolish LTCG Tax On Listed Equities: Veteran Investor Vijay Kedia's Suggestion To FM Nirmala Sitharaman

In a post on X, veteran investor Vijay Kedia noted that abolishing long-term capital gain (LTCG) tax on listed equities would prove to be a powerful signal that India wants to reward patient capital and entrepreneurship.

“India needs more patient capital, more entrepreneurship and more long term investing. Abolishing long-term capital gains tax on listed equities would be a powerful step in that direction,” he said in the tweet.

The hot topic of LTCG tax has remained debatable ever since it was reintroduced on listed equities in 2018

However, supporters of the tax argue that capital gains represent income and should therefore be taxed to keep fairness in the larger taxation system.

On other hand, Kedia argues that "tax policy should encourage households to move savings from passive assets, including imported stores of value such as gold, into productive businesses that create jobs, generate tax revenues and build national wealth."

Further, he noted that, "The appreciation in a company's value is not created in isolation. During its growth journey, the government already collects corporate tax, GST, income tax from employees, customs duties, stamp duties and numerous other levies. Long-term capital gains are often the final outcome of economic activity that has already generated substantial tax revenues."

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Why India Needs Massive Long-Term Capital?

"India requires enormous amounts of long-term capital to build world class enterprises, infrastructure and global champions," he said.

"Tax policy should encourage households to move savings from passive assets, including imported stores of value such as gold, into productive businesses that create jobs, generate tax revenues and build national wealth," he added.

On what India's tax policy needs to distinguish, he penned that a clear distinction between investment and speculation is required.

"A long term shareholder is a partner in wealth creation, not merely a participant in market transactions. Tax policy should reward long-term ownership of productive businesses and distinguish it from short-term speculation," he said.