Summary:
India's equity LTCG tax collection rose 78.8% to ₹1.29 lakh crore in FY25, taking the combined two-year collection above ₹2 lakh crore. The government has clarified that no proposal is under consideration to abolish equity LTCG tax.
The Indian government collected ₹1,29,158 crore in Long-Term Capital Gains (LTCG) tax from equity transactions in FY25, up nearly 79% from the previous financial year. Figures released in Parliament on 20 July 2026 show a large increase in tax revenues from stock market investments. The government also clarified that there is no proposal under consideration to do away with LTCG tax on equities.
LTCG Tax Collection up 79% in FY25
Data submitted by the Finance Ministry in the Lok Sabha shows that LTCG tax revenue from equity transactions rose to ₹1,29,158 crore in FY25 from ₹72,249 crore in FY24.
This is up by ₹56,909 crore, or about 78.8% YoY.
| LTCG tax collection in financial year | |
| FY24 | ₹72,249 crore |
| FY25 | ₹1,29,158 crore |
| Total | ₹2,01,407 crore |
The government earned more than ₹2 lakh crore from the equity LTCG tax in these two financial years.
The figures are only in relation to long-term capital gains from equity transactions. Do not confuse it with overall capital gains tax collected on property, gold and other assets.
Data for FY26 and FY27 were not available in the July 2026 parliamentary disclosure.
What is LTCG Tax Paid by Stock Market Investors?
As per the existing tax laws, any gains earned on listed equity shares and equity-oriented mutual funds held for more than 12 months are classified as long-term capital gains.
12.5% on LTCG exceeding ₹1.25 lakh in a financial year on eligible transactions executed on or after July 23, 2024 (exclusive of surcharge and cess).
Before amendment, the rate was 10 per cent on gains above Rs 1 lakh annually.
For instance, an investor earning a profit of ₹3 lakh on eligible long-term equity profits, would have taxable profits of ₹1.75 lakh after the ₹1.25 lakh limit.
The tax at 12.5% would be ₹21,875 before cess and any applicable surcharge.
The tax is levied on profits made when investments are sold, not on the rise in the market value of shares still held by an investor.
Govt to Remove LTCG Tax on Equities?
The Finance Ministry told Parliament that there is no proposal being considered to abolish LTCG tax on equity investments as on July 20, 2026.
It also clarified that the 12.5% LTCG tax rate is applicable to domestic investors as well as foreign portfolio investors (FPIs) for equity investments qualifying under the regime.
However, a separate tax exemption introduced in 2026 will apply to certain income of FPIs from Indian government securities from April 1, 2026.
That exemption does not cover gains on equity.
What Higher LTCG Collection Mean For Investors?
The rise in LTCG collections shows that the government’s tax kitty is increasingly being filled with gains from equity investments.
Higher collections don’t translate into a similar increase in stock market returns. The tax you pay depends on the profits you actually make, the level of your transactions, the rates that apply and when you sell investments.
For retail investors, the LTCG tax is a key factor that determines post-tax returns on investment.
The steep rise in collections additionally emphasizes the revenue implications of any future change in capital gains taxation.
Equity LTCG has become a major source of revenue, fetching ₹2,01,407 crore in FY24 and FY25. Any change in the tax rate or level of exemption would impact both government revenues and investor after-tax returns.
