Market Expert Urges Government to Reassess Capital Gains Tax Amid $1 Billion Daily Loss

Original: Losing $1 billion a day: Gurmeet Chadha urges PMO, Finance Ministry to revisit capital gains tax, STT

The Economic Times•Apr 3, 20263 min

In a Nutshell

Market expert Gurmeet Chadha has alerted the Indian government about significant foreign capital outflows, estimating a loss of nearly $1 billion daily since July 2024 due to increased capital gains tax and securities transaction tax (STT). He calls for a reassessment to restore investor confidence and attract long-term capital essential for India's growth.

Key Points

01India is reportedly losing nearly $1 billion in foreign capital daily.
02Cumulative foreign outflows have reached around $100 billion since July 2024.
03Recent tax hikes on capital gains and STT have made Indian markets less attractive.
04Chadha urges the government to revisit the current tax framework to regain investor confidence.
05Foreign institutional investors have sold equities worth ₹1.51 lakh crore in 2026.

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Full Summary

Market expert Gurmeet Chadha has raised alarms regarding India's foreign capital outflows, which he estimates at nearly $1 billion daily since July 2024. This is attributed to recent increases in capital gains tax and securities transaction tax (STT), leading to cumulative outflows of around $100 billion. Chadha emphasizes that the current tax regime could deter long-term investments crucial for India's growth ambitions, potentially reversing the benefits of prior structural reforms. He highlights the government's responsiveness to feedback on taxation in the past and urges policymakers to reassess the current framework to restore investor confidence. The Indian equity markets are under pressure, with foreign institutional investors (FIIs) selling domestic equities worth ₹19,837 crore in just two sessions in April, and a total of ₹1.51 lakh crore in 2026. The recent budget adjustments included a 150% increase in STT on futures and a 50% rise on options, further complicating the investment landscape.

Key Figures

$1 billion

Daily loss in foreign capital

$100 billion

Cumulative foreign capital outflows since July 2024

₹19,837 crore

Equities sold by foreign institutional investors in April

₹1.51 lakh crore

Total equities sold by FIIs in 2026

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Why It Matters

The ongoing capital outflows could lead to reduced investments in key sectors, affecting job creation and economic growth in India. If the current tax policies remain unchanged, it may hinder the ability of businesses to secure necessary funding.

Who is affected

Investors, businesses seeking capital, and the overall economy.

What to know

Policymakers should consider revising the capital gains tax and STT to restore investor confidence and attract foreign capital.

FAQ

Increases in capital gains tax and securities transaction tax (STT) since July 2024 are making Indian markets less attractive to foreign investors.

Foreign institutional investors have sold domestic equities worth ₹1.51 lakh crore in 2026, with significant sell-offs occurring in March and April.

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