Debate on LTCG, securities tax 'healthy', says Finance Minister Nirmala Sitharaman

She also acknowledged debate over capital gains taxes and the rupee’s depreciation, while saying the RBI aims to curb currency volatility.

Finance minister Nirmala Sitharaman on Tuesday acknowledged the debate over long-term capital gains (LTCG) tax and securities transaction tax (STT), as well as the rupee’s recent depreciation, while expressing confidence that private investment in India was reviving.

She attributed much of the pressure on the currency to external challenges, while maintaining that India’s macroeconomic fundamentals remained sound. (PTI)

With preparations for the Union budget for 2027-28 underway, Sitharaman said investors in India and abroad had raised questions about capital gains taxation and the treatment of different asset classes, but declined to indicate whether the government would make changes.

“It’s healthy to have this debate, and I will be keen to hear them,” she said at the Bloomberg New Economy Forum.

On the rupee, Sitharaman acknowledged that the currency had depreciated significantly over the past one-and-a-half to two years. She said the Reserve Bank of India (RBI) was seeking to curb volatility rather than defend a particular exchange rate. “They are not trying to fix the rupee; they are trying to stop the volatility,” she said, adding that the efforts would continue.

She attributed much of the pressure on the currency to external challenges, while maintaining that India’s macroeconomic fundamentals remained sound. The government would maintain fiscal discipline without compromising spending on welfare, education and healthcare, she said.

Sitharaman also expressed confidence that private investment was picking up, with domestic companies strengthening their balance sheets and attracting capital into sectors such as renewable energy, semiconductors, pharmaceuticals and aviation.

“Today I can say with confidence that private capital is moving in. India’s domestic private capital is moving in, and it’s also attracting private capital from elsewhere,” Sitharaman said, adding that companies were investing in sectors that could be within or outside their core areas of activity.

India had gone through a difficult phase after 2013-14, when poor asset management and companies’ inability to repay loans weakened corporate and banking balance sheets. The government subsequently undertook banking-sector reforms, while companies reduced debt and cleaned up their balance sheets, she said.