Long-term capital gains tax on all FII income hiked to 12.5 pc

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“These amendments volition instrumentality effect from the April 1, 2026, and shall accordingly, use successful narration to the appraisal twelvemonth 2026-27 and consequent appraisal years,” it said.

After raising the semipermanent superior gains (LTCG) taxation connected listed equity shares, equity-oriented communal funds and units of concern trusts sold by overseas organization investors (FIIs) to 12.5 per cent successful the erstwhile year’s Budget, the Finance Bill 2025 has projected to hike the LTCG taxation connected income from definite remaining securities from 10 per cent to 12.5 per cent from April 1, 2026.

While the rates of taxation successful the lawsuit of specified money oregon FIIs successful the lawsuit of semipermanent gains referred to successful conception 112A person been brought to parity with the rates applicable for residents, the complaint of income-tax calculated connected the income by mode of LTCG not referred to successful conception 112A were retained astatine 10 per cent vide Finance (No.2) Act, 2024, according to the Finance Bill 2025.

“It is projected to amend the provisions of conception 115AD to supply that income-tax connected the income by mode of semipermanent superior gains connected transportation of securities (other than units referred to successful conception 115AB) not referred to successful conception 112A, if any, included successful the full income, shall beryllium calculated astatine the complaint of 12.5 per cent,” the Bill said.

Section 112A provides for LTCG taxation connected the merchantability of listed equity shares, equity-oriented communal funds and concern trust. Under Section 115AD of the Income-tax Act, FIIs and specified funds are taxed astatine 10% connected semipermanent superior gains from the transportation of securities (excluding definite units covered nether Section 115AB).

The twelvemonth 2024 witnessed a crisp slowdown successful FII activity, with overseas investors pumping successful conscionable implicit Rs 1,600 crore connected a nett ground into the home equity marketplace compared to robust inflows of Rs 1.71 lakh crore successful the erstwhile year, a steep autumn of 99 per cent. FIIs started 2024 by buying Indian equities, purchasing Rs 1.12 lakh crore of home shares successful the archetypal 9 months of the year.

FIIs sold stocks worthy implicit Rs 2.63 lakh crore since October 2024 successful the aftermath of the economical slowdown and little firm earnings.

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Section 112A was inserted by the Finance Act 2018 to taxation semipermanent superior gains from the merchantability of listed equity shares, units of equity-oriented communal funds and units of concern trust.

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