On Monday, Aam Aadmi Party Member Raghav Chadha proposed the abolishment of long-term capital gains tax on equity investment by individual investors on the basis that it would result in greater financial markets, household wealth creation and the diversion of savings in physical assets like gold and real estate towards more productive purposes.
As a member of the discussion on the Union Budget 2026-27, Chadha argued that investors are presently facing a two-fold charge.
He explained that the Securities Transaction Tax which has been raised in the Budget was initially introduced in a time when long term capital gains on equities were at zero and it was simply a direct upfront tax regardless of whether an investor made a profit or a loss.
Under simultaneous operation of the two taxes, Chadha argued, market participation would be negatively affected. Capital gains tax on long term equities should be zero on personal investors in this country. I would prefer the LTCG to be zero at the time of raising STT, he said.
Meanwhile, he favoured the increase in the STT, which might serve as a deterrent to undue speculative trading by retail participants, but long term investors ought to be encouraged.
The AAP leader, citing comparisons across the globe, mentioned such jurisdictions as Switzerland, Singapore, the UAE, Hong Kong, New Zealand, Qatar and Malaysia where long term gains in equity are not or only marginally taxed. He said that India has to consider the role of a more investor friendly regime in increasing capital formation.
Wage security also became the focus of Chadha, who suggested a statutory formula of automatic adjustments of inflation linked increases across corporates, factories and gig workers.
He observed that dearness allowance increment and periodical remuneration commissions enjoy government workers and that a huge portion of the official workforce continues to rely on the and mercy of employers.
Otherwise, he cautioned, real wages will be at risk of stagnation even though living costs will be increasing.
Giving a warm welcome to the rise in investment limit of the non resident Indians, Chadha however urged the government to look into the reasons why foreign institutional investors are still leaving Indian markets.
He asserted that the shift came after the withdrawal of foreign portfolio investors, amounting to almost USD 23 billion in the last financial year. Although further NRI inflows would be beneficial, he explained, more structural issues that impact world investor sentiment need to be tackled.
To the middle-class who are on salaries, Chadha termed the absence of changes in income tax slabs as disappointment. Expectations of relief had been high he said, with continued inflationary pressures being felt.
He also decried the amount of public spending on health saying that India spends approximately 2 per cent of government spending in the sector. He urged a greater impetus in the direction of public health infrastructure, comparing it with more serious investments in developed markets like the United States, Germany, the United Kingdom and Japan.
Chadha suggested transferring land and property records to a digital registry stored on a blockchain as one of the institutional reforms. Such a system, he said, would be clear, time stamped and resistant to manipulation, hence minimizing conflicts and curbing fraud.
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The intervention put investor taxation, wage resilience and social sector priorities on the agenda of the Opposition in contesting the Budget and called on structural reforms to ensure continued growth in the long term.
