The Federation of Indian Chambers of Commerce and Industry urged the Finance Ministry to exempt long-term capital gains tax on listed equities in the upcoming Budget.
The apex business chamber advocated establishing a stable 10-year capital gains tax regime to provide long-term predictability for market participants.
Industry leaders highlighted that the 2018 reintroduction of capital gains tax alongside existing securities transaction taxes created an unfair dual levy on equities.
Recent policy changes raised short-term capital gains tax to 20 percent and long-term rates to 12.5 percent for gains exceeding Rs 1.25 lakh.
Foreign portfolio investors withdrew nearly Rs 3.08 lakh crore this year as higher taxes and lack of currency adjustments severely eroded investment returns.
FICCI suggested increasing securities transaction taxes on delivery-based trades to protect government revenue while restoring the capital gains exemption.
The chamber requested tax rule modifications allowing foreign investors to compute taxable gains using their original investment currency.
Such adjustments would effectively account for rupee depreciation when determining tax liabilities for offshore funds.
The proposal also demanded clear exemptions for specific commercial transactions and group transfers from rigid anti-abuse tax provisions.
Regarding corporate restructuring, the group urged the government to allow loss carry-forward benefits across all business sectors uniformly.
The chamber recommended incorporating safeguards based on business continuity and payroll costs during corporate mergers.
Additionally, FICCI demanded the abolition of the 0.1 percent tax deduction at source on qualifying business-to-business purchases.
Industry representatives argued that existing digital tax systems already capture these transactions, making the additional tax deduction redundant.
Removing this requirement would unblock vital working capital and reduce heavy compliance burdens for registered businesses.
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