SEBI Recommends Scrapping Long-Term Capital Gains Tax for Foreign Investors in India

# SEBI Recommends Scrapping Long-Term Capital Gains Tax for Foreign Investors in India **MUMBAI, November 2, 2026:** The Securities and Exchange Board of India (SEBI) has reportedly recommended that the government remove the long-term capital gains (LTCG) tax imposed on foreign investors in Indian equities. According to a Reuters report citing two sources familiar with the matter, the market regulator has also proposed tax relief for domestic mutual fund investors under certain conditions. ### What Has SEBI Proposed? Currently, investors generally pay a 12.5 per cent long-term capital gains tax on qualifying listed equity investments held for more than 12 months. SEBI has reportedly suggested removing this tax for foreign investors to make Indian equity markets more attractive to international investment. The recommendations are part of the regulator's pre-Budget representations to the government ahead of the Union Budget expected in February 2027. ### Possible Relief for Mutual Fund Investors SEBI has also reportedly proposed that domestic mutual fund investors should not face LTCG tax when switching from one mutual fund scheme to another, provided the existing units have been held for more than one year. The proposal aims to encourage investors to remain invested in domestic mutual funds rather than withdraw their money from the market. ### Why Is SEBI Making This Recommendation? Foreign investors have reportedly sold approximately $31 billion worth of Indian stocks during 2026, putting pressure on domestic equity markets. The regulator's proposals are aimed at reducing investment costs and improving India's attractiveness to international investors. ### Has the Government Approved the Proposal? No. These are recommendations reported by Reuters and are not approved tax changes. The final decision rests with the Union Government. Investors should continue following the existing tax rules unless an official change is announced. The proposals may become part of discussions ahead of the Union Budget 2027.