Veteran investor Vijay Kedia has made a direct appeal to Finance Minister Nirmala Sitharaman and the Finance Ministry to abolish long-term capital gains (LTCG) tax on listed equities. In a message addressed to the Finance Minister and Finance Ministry, Kedia stated that removing LTCG tax would strengthen India's capital markets and improve long-term investment sentiment. He argued that India needs more patient capital, more entrepreneurship and more long term investing, and that this policy change would be a powerful step in that direction. The appeal comes at a time when foreign institutional investors have continued pulling money out of Indian equities, with concerns over market sentiment intensifying.
Kedia criticized the current taxation framework for blurring the distinction between investment and speculation. As reported by LiveMint, he argued that current taxation frameworks often blur that line, even though the economic impact of both activities is fundamentally different. Short-term speculation revolves around price movements and trading activity, while long-term investing supports corporate growth, innovation and wealth creation over years or decades. He emphasized that tax policy should clearly distinguish between investment and speculation, noting that long-term shareholders are partners in wealth creation rather than mere market participants. In his latest statement, Kedia stressed that a long-term shareholder is a partner in wealth creation, not merely a participant in market transactions.
Kedia highlighted the broader economic implications of long-term capital gains taxation. According to LiveMint reports, he pointed out that by the time investors eventually realise long-term capital gains, governments have often already collected significant taxes through multiple layers of economic activity generated by those businesses. The appreciation in a company's value is not created in isolation, as during its growth journey the government collects corporate tax, GST, income tax from employees, customs duties, stamp duties and numerous other levies. He argued that long-term capital gains are often the final outcome of economic activity that has already generated substantial tax revenues. In his latest statement, Kedia emphasized 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.
Kedia framed the issue as extending beyond tax policy to India's future growth model. As reported by LiveMint, he 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. He stated that a long-term shareholder is not a speculator but a provider of patient risk capital who helps companies expand, create jobs, innovate and contribute to India's economic growth. He emphasized that India requires enormous amounts of long-term capital to build world class enterprises, infrastructure and global champions. In his latest statement, Kedia stressed that India required large pools of long-term capital to create "world-class enterprises, infrastructure and global champions".
Kedia believes tax policy should actively encourage a shift toward productive business ownership. According to LiveMint reports, he stated 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. He believes the country needs significantly more long-term risk capital to create globally competitive businesses, infrastructure and entrepreneurship, positioning the LTCG tax debate as part of India's broader economic development strategy. The remarks come at a time when foreign institutional investors have continued pulling money out of Indian equities, with concerns over market sentiment intensifying. In the Union Budget presented in July 2024, Sitharaman raised the LTCG tax rate on most assets to 12.5% from 10%, while increasing the exemption limit for listed equity and equity-linked instruments to ₹1.25 lakh.
