'Only 30% SIPs are crossing 3 years': Fund Manager urges FM Sitharaman to reconsider LTCG tax
'Humble request to the finance minister to reconsider LTCG for equity. We need risk capital to fund India's growth story,' says chief investment officer Gurmeet Chadha
- Dec 17, 2025,
- Updated Dec 17, 2025 5:08 PM IST
Complete Circle Chief Investment Officer (CIO) Gurmeet Chadha on Wednesday urged Finance Minister Nirmala Sitharaman to revisit the long-term capital gains (LTCG) tax on equities, warning that patient risk capital is struggling to stay invested. "Patient long-term risk Capital must be rewarded. Only 30% SIPs are crossing 3 years," the CIO said. "Humble request to Honourable finance minister to reconsider LTCG for equity. We need risk capital to fund India's growth story."
Gurmeet Chadha's comments came a day after AAP MP Raghav Chadha argued that India's high capital gains taxes are discouraging long-term investments, even as domestic investors have increasingly shouldered the responsibility of supporting markets during foreign outflows.
"Investment in India is highly taxed. We have seen over the past few years that global capital is very volatile. As a result, from January 2025 to the second week of December 2025, foreign portfolio investors withdrew Rs 1.6 lakh crore from Indian equities," Raghav Chadha said in the Rajya Sabha.
He pointed to the role played by domestic investors during this period. "When this withdrawal happened, domestic institutional investors and domestic investors stepped forward to protect India's stock market. During the same period, domestic investors invested ₹7 lakh crore in Indian equities. This was also a historic achievement. It shows the maturity of the market. But more than that, it shows that when foreign money leaves, it is the Indian investor who comes to the rescue of the stock market."
Raghav Chadha questioned whether the government had done anything to encourage this investment further. "However, when salaried employees invested through SIPs, when small savers invested through mutual funds, and when pension and insurance money was invested-what did the government do to encourage this investment?" he asked.
He said frequent tax changes and higher levies have created uncertainty for long-term investors. "Today, a taxation regime has emerged in which capital gains tax is very high. Investors do not get the benefit of indexation. Because surcharges are high, tax rates have increased sharply. And due to frequent changes, investors do not get certainty. A system has been created where long-term investments in this country are being treated as short-term speculation when it comes to taxation. This needs to be changed."
The AAP MP said that if India truly wants deep capital markets and long-term domestic savings, then patient capital must be respected and not penalised. "The basic principle of economics is: tax consumption if you must, but nurture investments. We will have to encourage investment. By over-taxing investments, we are disincentivising wealth creation."
Raghav Chadha also flagged slowing bank deposit growth and its impact on credit. "We have seen that in the financial year 2024–25, the growth in bank deposits fell to just 10%, compared to the previous financial year, 2023–24, when it was 13%. That is, there has been a decline in deposit growth. What happens as a result? Banks’ cost of funds increases. Loans become expensive. MSMEs suffer, and financial stability weakens."
He proposed a set of tax measures to support savers. "First, the tax-free limits should be increased as far as interest income from savings bank accounts is concerned. Second, if someone makes a fixed deposit for more than five years, they should be given tax relief. There needs to be tax incentivisation for that kind of investor."
He further said, "The benefit of indexation under long-term capital gains should be implemented properly and in spirit across asset classes. Third, the tax on short-term capital gains is very high; it should be reduced if we want to encourage investment. Along with this, we must ensure that patient domestic capital is preserved, rewarded, and not penalised."
In July 2024, FM Sitharaman raised the LTCG rate from 10% to 12.5% for several assets, including equity-related gains, while increasing the exemption limit for listed equity LTCG from Rs 1 lakh to Rs 1.25 lakh. The short-term capital gains tax rate was also increased from 15% to 20% in the Union Budget presented on July 23, 2024.
Complete Circle Chief Investment Officer (CIO) Gurmeet Chadha on Wednesday urged Finance Minister Nirmala Sitharaman to revisit the long-term capital gains (LTCG) tax on equities, warning that patient risk capital is struggling to stay invested. "Patient long-term risk Capital must be rewarded. Only 30% SIPs are crossing 3 years," the CIO said. "Humble request to Honourable finance minister to reconsider LTCG for equity. We need risk capital to fund India's growth story."
Gurmeet Chadha's comments came a day after AAP MP Raghav Chadha argued that India's high capital gains taxes are discouraging long-term investments, even as domestic investors have increasingly shouldered the responsibility of supporting markets during foreign outflows.
"Investment in India is highly taxed. We have seen over the past few years that global capital is very volatile. As a result, from January 2025 to the second week of December 2025, foreign portfolio investors withdrew Rs 1.6 lakh crore from Indian equities," Raghav Chadha said in the Rajya Sabha.
He pointed to the role played by domestic investors during this period. "When this withdrawal happened, domestic institutional investors and domestic investors stepped forward to protect India's stock market. During the same period, domestic investors invested ₹7 lakh crore in Indian equities. This was also a historic achievement. It shows the maturity of the market. But more than that, it shows that when foreign money leaves, it is the Indian investor who comes to the rescue of the stock market."
Raghav Chadha questioned whether the government had done anything to encourage this investment further. "However, when salaried employees invested through SIPs, when small savers invested through mutual funds, and when pension and insurance money was invested-what did the government do to encourage this investment?" he asked.
He said frequent tax changes and higher levies have created uncertainty for long-term investors. "Today, a taxation regime has emerged in which capital gains tax is very high. Investors do not get the benefit of indexation. Because surcharges are high, tax rates have increased sharply. And due to frequent changes, investors do not get certainty. A system has been created where long-term investments in this country are being treated as short-term speculation when it comes to taxation. This needs to be changed."
The AAP MP said that if India truly wants deep capital markets and long-term domestic savings, then patient capital must be respected and not penalised. "The basic principle of economics is: tax consumption if you must, but nurture investments. We will have to encourage investment. By over-taxing investments, we are disincentivising wealth creation."
Raghav Chadha also flagged slowing bank deposit growth and its impact on credit. "We have seen that in the financial year 2024–25, the growth in bank deposits fell to just 10%, compared to the previous financial year, 2023–24, when it was 13%. That is, there has been a decline in deposit growth. What happens as a result? Banks’ cost of funds increases. Loans become expensive. MSMEs suffer, and financial stability weakens."
He proposed a set of tax measures to support savers. "First, the tax-free limits should be increased as far as interest income from savings bank accounts is concerned. Second, if someone makes a fixed deposit for more than five years, they should be given tax relief. There needs to be tax incentivisation for that kind of investor."
He further said, "The benefit of indexation under long-term capital gains should be implemented properly and in spirit across asset classes. Third, the tax on short-term capital gains is very high; it should be reduced if we want to encourage investment. Along with this, we must ensure that patient domestic capital is preserved, rewarded, and not penalised."
In July 2024, FM Sitharaman raised the LTCG rate from 10% to 12.5% for several assets, including equity-related gains, while increasing the exemption limit for listed equity LTCG from Rs 1 lakh to Rs 1.25 lakh. The short-term capital gains tax rate was also increased from 15% to 20% in the Union Budget presented on July 23, 2024.