Vijay Kedia Calls for Removal of Long-Term Capital Gains Tax in India

Veteran Investor Vijay Kedia Urges Government to Abolish LTCG Tax on Listed Equities

Veteran investor Vijay Kedia has made a direct pitch to Finance Minister Nirmala Sitharaman and the Finance Ministry, urging the government to abolish long-term capital gains (LTCG) tax on listed equities. Kedia argues that the levy punishes the very investors India needs most.

In a post on X, Kedia framed his appeal as the first of three suggestions for strengthening India's capital markets. He emphasized that a long-term shareholder is not a speculator but a provider of patient risk capital. By holding businesses over extended periods, investors enable companies to expand, create jobs, innovate, and contribute to broader economic growth.

Kedia's central argument is that long-term capital gains are the residual outcome of economic activity that has already been heavily taxed. He pointed out that over the course of a company's growth, the government collects corporate tax, GST, income tax from employees, customs duties, stamp duties, and numerous other levies. Applying LTCG tax at the end of that journey, he argued, amounts to taxing the same value creation twice.

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India needs enormous amounts of long-term capital to build world-class enterprises, infrastructure, and global champions. Kedia said tax policy should be designed to encourage households to shift savings away from passive assets, specifically citing gold, which he described as an imported store of value, and into productive businesses that generate employment, tax revenues, and national wealth.

Kedia also emphasized the importance of drawing a clear regulatory and tax line between investing and speculation. He advocated for explicitly rewarding long-term ownership of productive businesses and differentiating it from short-term trading activity.

The reintroduction of LTCG tax on listed equities in the Union Budget 2018 after a 14-year gap has been a point of contention among market participants. The tax was reintroduced with gains above Rs 1 lakh taxed at 10 percent. The Budget 2024 subsequently raised the rate to 12.5 percent and increased the exemption threshold to Rs 1.25 lakh.

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Kedia's suggestions for strengthening India's capital markets are timely, given the ongoing debate on the impact of LTCG tax on market participants.