Raghav Chadha Calls For Scrapping LTCG Tax On Equities After STT Hike In Budget Debate
The Union Budget 2026–2027 has reignited debate around stock market taxation, with a fresh call to abolish Long Term Capital Gains Tax (LTCG) on equities for individual investors. The demand has been raised in the Rajya Sabha amid wider discussions on market participation, retail investor protection, and the government’s evolving tax strategy on financial transactions.
The proposal comes shortly after the announcement of a sharp increase in Securities Transaction Tax (STT) on derivatives trading, a move that has drawn mixed reactions across the investment ecosystem.
He argued that maintaining both taxes together could discourage long-term participation in equity markets. According to him, several global financial hubs have adopted more investor-friendly capital gains frameworks, which help deepen retail participation and strengthen wealth creation.
“I welcome the hike in STT (security transaction tax) on derivatives as it can curb reckless speculation. Nearly 90% of retail investors lose money in F&O, turning markets into gambling. When STT was originally introduced, LTCG was zero. But now with both STT and LTCG in place, investors are disincentivised. I urge the govt to abolish LTCG on equities for individuals, as done in Switzerland, Singapore, UAE & others,” Chadha wrote in a post on X, with a video of his Rajya Sabha speech on Monday, February 9.
He further reiterated his appeal, stating, “My Demand: Make Long Term Capital Gain TAX on Equities NIL for individual investor,” Chadha wrote.
As per Budget proposals announced on 1 February, 2026, STT on futures transactions will rise to 0.05% from 0.02%, marking a 150% increase. Meanwhile, STT on options trades will increase to 0.15% from 0.01%, representing a 50% hike.
The move is widely seen as an attempt to curb excessive speculation in derivatives markets, where high leverage and short-term bets often expose inexperienced investors to heavy losses.
The proposal comes shortly after the announcement of a sharp increase in Securities Transaction Tax (STT) on derivatives trading, a move that has drawn mixed reactions across the investment ecosystem.
Demand Linked To Budget Tax Changes
During the Budget discussion in Parliament’s Upper House, Rajya Sabha MP Raghav Chadha welcomed the government’s decision to raise STT on futures and options trading. However, he simultaneously urged policymakers to consider scrapping LTCG tax on equities for individual investors.He argued that maintaining both taxes together could discourage long-term participation in equity markets. According to him, several global financial hubs have adopted more investor-friendly capital gains frameworks, which help deepen retail participation and strengthen wealth creation.
“I welcome the hike in STT (security transaction tax) on derivatives as it can curb reckless speculation. Nearly 90% of retail investors lose money in F&O, turning markets into gambling. When STT was originally introduced, LTCG was zero. But now with both STT and LTCG in place, investors are disincentivised. I urge the govt to abolish LTCG on equities for individuals, as done in Switzerland, Singapore, UAE & others,” Chadha wrote in a post on X, with a video of his Rajya Sabha speech on Monday, February 9.
He further reiterated his appeal, stating, “My Demand: Make Long Term Capital Gain TAX on Equities NIL for individual investor,” Chadha wrote.
STT Hike Targets Speculative Trading
The government’s latest tax adjustment focuses heavily on derivatives trading, particularly futures and options (F&O), a segment that has witnessed explosive growth in retail participation.As per Budget proposals announced on 1 February, 2026, STT on futures transactions will rise to 0.05% from 0.02%, marking a 150% increase. Meanwhile, STT on options trades will increase to 0.15% from 0.01%, representing a 50% hike.
The move is widely seen as an attempt to curb excessive speculation in derivatives markets, where high leverage and short-term bets often expose inexperienced investors to heavy losses.
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