Vijay Kedia Advocates for Removal of Long-Term Capital Gains Tax on Equities

India's Long-Running Debate Over Taxation of Equity Investments Returns to Spotlight

India's debate over taxation of equity investments has once again gained momentum after veteran investor Vijay Kedia made a direct appeal to Finance Minister Nirmala Sitharaman and the Finance Ministry to abolish long-term capital gains (LTCG) tax on listed equities.

Kedia argued that abolishing LTCG tax on listed equities could become a powerful signal that India wants to reward patient capital and entrepreneurship. India needs more patient capital, more entrepreneurship, and more long-term investing to fuel its growth, he said. Abolishing long-term capital gains tax on listed equities would be a powerful step in that direction.

The debate over LTCG tax has remained contentious ever since it was reintroduced on listed equities in 2018 after being exempt for over a decade. Supporters of the tax argue that capital gains represent income and should therefore be taxed to maintain fairness in the broader taxation system. However, Kedia believes that current taxation frameworks often blur the line between investment and speculation, with long-term investing supporting corporate growth, innovation, and wealth creation over years or decades.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Supporting Productive Businesses is Key

Kedia argued that investors who stay committed to businesses over long periods effectively become partners in nation-building because their capital allows companies to scale operations, hire employees, and generate economic activity. Tax policy should clearly distinguish between investment and speculation, he said. A long-term shareholder is a partner in wealth creation, not merely a participant in market transactions.

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.

Rewarding Long-Term Ownership

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Kedia further argued that long-term investors should not be treated as speculators because they play a critical role in funding businesses, creating jobs, and building India's economic strength over time. A long-term shareholder is not a speculator but a provider of patient risk capital. By investing in and holding businesses, investors help companies expand, create jobs, innovate, and contribute to India's economic growth.

Kedia framed the issue not merely as a tax debate but as a broader question of how India wants to shape its future growth model. According to him, the country needs significantly more long-term risk capital to create globally competitive businesses, infrastructure, and entrepreneurship. 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.

Encouraging Long-Term Risk Capital

Kedia believes that tax policy should actively encourage a shift away from passive stores of value and toward ownership of Indian businesses. India requires enormous amounts of long-term capital to build world-class enterprises, infrastructure, and global champions. By abolishing LTCG tax on listed equities, India can signal its commitment to rewarding patient capital and entrepreneurship, and encourage more households to invest in productive businesses.