The long-term capital gains (LTCG) tax on equity transactions generated ₹1.29 lakh crore in Assessment Year (AY) 2025–26, underscoring the growing contribution of capital market taxes to India’s revenue collections. The figures were disclosed by the government in Parliament, highlighting the significant increase in tax receipts amid strong equity market participation and rising investor gains. The disclosure also comes shortly after the Finance Ministry clarified that there is no proposal under consideration to scrap the LTCG tax on listed equities — a clarification we covered in detail in Finance Ministry says no proposal to scrap LTCG tax on listed equities. (Reuters)
The data reflects the continued expansion of India’s equity markets, supported by growing retail participation, sustained domestic institutional investment, and resilient corporate earnings, all of which have contributed to higher taxable long-term capital gains.
Government Reveals LTCG Tax Collections in Parliament
Responding to a question in Parliament, the Finance Ministry said that LTCG tax on equity transactions yielded ₹1.29 lakh crore in AY 2025–26.
The disclosure highlights:
- Strong tax collections from equity investments.
- Increased participation in capital markets.
- Higher long-term gains booked by investors.
- The growing importance of capital gains tax in government revenues.
LTCG Tax Collection Snapshot
| Metric | Details |
|---|---|
| Assessment Year | AY 2025–26 |
| LTCG tax collected from equity transactions | ₹1.29 lakh crore |
| Source | Finance Ministry’s reply in Parliament |
Collections Reflect Strong Equity Market Activity
India’s stock markets have witnessed sustained growth in recent years, driven by:
- Rising retail investor participation.
- Strong inflows from domestic institutional investors.
- Expanding systematic investment plan (SIP) contributions.
- Robust corporate earnings across several sectors.
These factors have translated into higher long-term capital gains for investors, boosting tax collections from equity transactions. The pipeline of large market events also keeps gains in focus — our look at the SBI MF IPO and what past big listings suggest explains why listing-year gains often show up in later tax data.
Key Drivers of Higher Collections
| Driver | Impact |
|---|---|
| Retail participation | More taxable investment gains |
| Market appreciation | Higher capital gains |
| Domestic institutional inflows | Stronger market liquidity |
| Long-term investing | Increased LTCG realization |
No Proposal to Abolish LTCG Tax
The revenue figures were disclosed alongside the government’s clarification that there is currently no proposal to remove the long-term capital gains tax on listed equities.
Minister of State for Finance Pankaj Chaudhary informed Parliament that the government is not considering scrapping the tax, despite demands from sections of the investment community for relief to encourage long-term investing.
The strong revenue generated through the levy reinforces its importance to the government’s fiscal position.
Government’s Current Position
| Issue | Status |
|---|---|
| Proposal to scrap LTCG on equities | Not under consideration |
| Current tax regime | Continues unchanged |
| Revenue significance | Major contributor to tax collections |
Why the Figures Matter
The latest tax collection data illustrates how India’s deepening capital markets are becoming an increasingly important source of government revenue.
For policymakers, robust LTCG collections provide:
- Additional fiscal resources.
- Evidence of expanding financial market participation.
- Greater visibility into investment trends.
- A stronger case for maintaining stability in the capital gains tax framework.
For investors, the figures also indicate that the government continues to view the LTCG tax as a significant component of its direct tax collections.
Significance of Higher LTCG Revenue
| Stakeholder | Implication |
|---|---|
| Government | Higher direct tax collections |
| Investors | Existing tax regime likely to continue |
| Capital markets | Reflects growing investment activity |
| Economy | Expanding financial participation |
Looking Ahead
The ₹1.29 lakh crore collected from LTCG tax on equity transactions in AY 2025–26 highlights the increasing contribution of India’s capital markets to government revenues. As retail participation continues to rise and domestic investors play a larger role in supporting equity markets, capital gains taxation is becoming an increasingly important part of the country’s fiscal framework.
With the Finance Ministry reiterating that there is no proposal to abolish the LTCG tax on listed equities, investors should expect the current tax regime to remain in place unless broader reforms are introduced through a future Union Budget. The government’s emphasis on policy stability suggests that any changes to capital gains taxation will continue to balance investor interests with revenue requirements.
Frequently Asked Questions
What is LTCG tax?
LTCG stands for long-term capital gains. It is the tax you pay on the profit made when you sell an asset — such as listed shares or equity mutual fund units — after holding it beyond the qualifying long-term period. In AY 2025–26, LTCG tax on equity transactions alone brought the government ₹1.29 lakh crore.
Is the government planning to remove LTCG tax on shares?
No. Minister of State for Finance Pankaj Chaudhary told Parliament that no proposal to scrap the LTCG tax on listed equities is under consideration, despite requests from parts of the investment community. Any change would have to come through a future Union Budget.
Why have LTCG tax collections risen so sharply?
Collections track market activity. Rising retail participation, steady SIP inflows, strong domestic institutional buying and healthy corporate earnings have all increased the long-term gains investors actually book — and therefore the tax paid on them.
Get the day’s top stories in your inbox
One concise email. No spam, unsubscribe anytime.
