Abolish LTCG Tax On Equities, Reward Patient Capital And Entrepreneurship, Urges Vijay Kedia

Kedia’s Core Argument

Kedia’s central point is that long term shareholders are not speculators but providers of “patient risk capital” who stay invested through cycles so that companies can expand, innovate and create jobs. He believes the current 12.5 per cent long term capital gains tax on listed equities above the exemption threshold blurs the lines between investment and speculation and sends the wrong signal to genuine long horizon investors. In his view, tax policy should explicitly distinguish between short term trading in price movements and long term ownership of productive businesses that underpin economic growth.

Why He Thinks LTCG Tax Hurts India’s Growth Story

Kedia has linked the LTCG debate to India’s larger need for “patient capital, more entrepreneurship and more long term investing” to build global champions, infrastructure and high quality jobs. He argues that tax rules should encourage households to move savings away from passive assets like gold and real estate towards equities and ownership in Indian companies, rather than treating equity investors as soft targets for additional levies. He also points out that the government already earns substantial revenue from the same corporate growth through company income tax, GST, customs duties, employee income tax and stamp duties, and that layering LTCG and dividend taxation on top risks double taxing the same value creation.

Market Debate And Policy Trade Offs

Kedia’s comments have reignited a long running policy debate on whether India’s tax framework discourages long term wealth creation in capital markets. Supporters of his view say that lower or zero LTCG on equities could deepen domestic capital pools, raise retail participation and reduce reliance on volatile foreign flows. Critics worry that completely abolishing LTCG could strain tax revenues, accentuate distributional concerns and open new avenues for tax arbitrage if capital gains are privileged too heavily over other forms of income. For now, his intervention adds pressure on policymakers ahead of the next Budget to at least re examine how India defines, taxes and rewards truly long term equity ownership.

Patient Capital Policy Highlights

• Kedia urges abolition of long term capital gains tax on listed equities in a message to Finance Minister Nirmala Sitharaman and the Finance Ministry.
• He calls long term shareholders “providers of patient risk capital” who help companies expand, innovate and generate employment.
• He argues that current LTCG rules blur the distinction between long term investment and short term speculation.
• India, he says, needs large pools of patient capital to build world class enterprises, infrastructure and global champions.
• Tax policy, in his view, should nudge savings away from passive assets like gold towards productive business ownership.
• Analysts note that his proposal raises trade offs around revenue loss, equity within the tax system and possible tax arbitrage, but also highlights the need to better reward long term investing.

Sources: Livemint, Business Today, Economic Times, Moneycontrol