LTCG tax: India taxes capital gains. These countries don't: Singapore, Hong Kong and more
India once had no long-term capital gains (LTCG) tax on equities. Back in 2004, then finance minister P. Chidambaram abolished the LTCG tax on securities transactions altogether. After a pause of 14 long years, it was reintroduced in 2018 by then finance minister Arun Jaitley, who argued that the 'return on investment in equity is already quite attractive' and there's a strong case for bringing long-term capital gains from listed equities into the tax net. Since then, the levy has gone through various changes.
Presently, long-term gains from equities, mutual funds, property, and gold exceeding ₹1.25 lakh in a year are taxed at 12.5%. Indexation benefit no longer exists. On the other hand, short-term capital gains are taxed at a 20% rate.
United States: Slab rates vary by income level. Generally, if an asset is held for more than one year before it is disposed of, capital gain or loss is long-term. If it is held for one year or less, the capital gain or loss is short-term. Long-term capital gains are taxed at preferential rates of 0%, 15% and 20% depending on taxpayers income and filing status.
UK: Like the US, the UK levies capital gains tax based on individual taxpayers' income, with basic-rate taxpayers paying 18% and higher- and additional-rate taxpayers paying 24%. However, the UK generally does not distinguish between long and short-term capital gains.
Canada: The North American country doesn't have a separate framework for taxing capital gains on equity. It uses an inclusion system. Half of the gains are added to the individual's taxable income and taxed at the applicable income tax rate. To be sure, 50% is the inclusion rate, not the capital gains tax rate. Like the UK, Canada has no segregation between long- and short-term gains.
Australia: Like Canada, Australia also levies capital gains tax at an individual's applicable income tax rate rather than at a fixed CGT rate. However, there's one distinction. Australia offers a 50% discount if the asset is held for at least 12 months. By contrast, Canada's 50% inclusion is not based on the asset's holding period.
Singapore does not levy capital gains tax. Profits earned by individuals from selling shares, mutual funds, financial instruments and investment property are generally tax-free, provided the gains are capital in nature rather than business income. Similarly, other countries such as Mauritius, Switzerland, Hong Kong SAR, and the Netherlands do not levy taxes on capital gains.
There have been growing calls from investors and market participants for abolition of LTCG tax. The Securities and Exchange Board of India (SEBI) has also proposed tax relief for domestic mutual fund investors, Reuters had reported. India's equity market has lagged emerging market peers over the past two years, it said. Reportedly, foreign investors have sold a record $31 billion in Indian stocks this year and overseas investments by retail investors have surged as returns have stagnated.
While , the calls to abolish LTCG tax have gained momentum in the recent past, such a move would also mean loss of revenue to the exchequer.
In July 2026, Pankaj Chaudhary, Minister of State for Finance, stated that the revenue generated from LTCG tax in AY 2024-25 stood at ₹72,249 crore and for AY 2025-26 jumped sharply to ₹1,29,158 crore.
Blaming it on subdued market returns and FII outflows, SBI Research estimates that LTCG collections for FY26 will be ₹1 lakh crore and for FY27 about ₹50,000 crore. “So, even if we assume that the government decides to abolish LTCG tax, the shortfall for FY28 will be only in the range of ₹40,000-50,000 crore / 0.1%-0.2%. We believe the Government would be able to take this hit if, hypothetically, the entire capital gains taxes were abolished.”
Devansh Sharma is Deputy Editor at Mint (Digital), where he leads newsroom operations and helps shape the website's editorial strategy. With nearly 15 years of experience in business journalism, he specialises in business, personal finance, stock markets, mutual funds, and economic developments, while also covering geopolitics and major breaking news. During his tenure at Mint, which spans nearly two years, he has led planning and coverage of key news events, including the Union Budget, RBI monetary policy announcements, US Federal Reserve decisions, elections, and major international developments.<br><br> Devansh holds a Master's degree in Journalism & Mass Communication from the School of Communication Studies, Panjab University. Before rejoining Mint, he worked with leading business news organisations, including The Economic Times, Moneycontrol, and ET Money. At ET Money, he served as Senior Investor Educator, where he created educational content to help readers better understand investing, mutual funds, and personal finance. Throughout his career, he has focused on making complex business and financial developments accurate, accessible, and relevant for a broad audience.
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