SEBI recommends abolition of Long Term Capital Gains tax for foreign investors

The Indian stock market regulator SEBI has recommended the abolition of Long Term Capital Gains (LTCG) tax for foreign investors. According to a report by Business Standard, the regulator held several meetings with foreign investors during the last 2 years. These meetings were conducted at a time when continuous selling was being carried out by foreign investors, which resulted in pressure being observed on the Indian currency.

Looking at market figures, India's benchmark Nifty 50 index has fallen by 4.8 per cent in the last 2 years. In contrast, the MSCI Emerging Markets Index has recorded an increase of 40 per cent. During this period, returns on local equity mutual funds, which have become a common medium of savings for retail investors, have also remained stagnant.

According to data from fund research firm Morningstar, funds that invest in large-cap stocks have seen a decrease of 1.6 per cent in their average returns. This recommendation by SEBI has been made keeping in view the sentiment of foreign investors and the market conditions.