Scrap LTCG Tax On Equities For Individuals, Says Rajya Sabha MP Raghav Chadha Amid STT Hike

Rajya Sabha MP Raghav Chadha has called on the government to abolish Long-Term Capital Gains (LTCG) tax on equities for individual investors. His demand comes after Finance Minister Nirmala Sitharaman announced a hike in Securities Transaction Tax (STT) on derivatives trading in the Union Budget 2026–27.

Demand Raised During Budget Debate

Speaking in the Rajya Sabha during the Budget discussion, the Aam Aadmi Party leader supported the increase in STT on futures and options (F&O) trading. However, he urged the Finance Minister to make LTCG on equities nil for individual investors, aligning India with several other countries, to avoid discouraging long-term investment.

STT was originally introduced in 2004 by then Finance Minister P. Chidambaram to replace LTCG tax and curb tax evasion.

The tax applies to transactions in equities as well as derivatives.

Details of the STT Hike

On February 1, 2026, Sitharaman proposed a sharp increase in STT rates. As per the Budget proposals:

• STT on futures transactions will rise to 0.05% from 0.02% (a 150% increase).
• STT on options transactions will increase to 0.15% from 0.01% (a 50% increase).

Chadha welcomed the move, stating that higher STT on derivatives could help curb excessive speculation. He noted that nearly 90% of retail investors incur losses in F&O trading, turning markets into a form of gambling.

Call to Scrap LTCG on Equities

In a post on X along with a video of his Rajya Sabha speech delivered on February 9, Chadha said:

“I welcome the hike in STT (security transaction tax) on derivatives as it can curb reckless speculation. Nearly 90% of retail investors lose money in F&O, turning markets into gambling. When STT was originally introduced, LTCG was zero. But now with both STT and LTCG in place, investors are disincentivised. I urge the govt to abolish LTCG on equities for individuals, as done in Switzerland, Singapore, UAE & others.”

My Demand: Make Long Term Capital Gain TAX on Equities NIL for individual investor.

I welcome the hike in STT (security transaction tax) on derivatives as it can curb reckless speculation. Nearly 90% of retail investors lose money in F&O, turning markets into gambling.

When STT… pic.twitter.com/HhpZd9z8i1

— Raghav Chadha (@raghav_chadha) February 9, 2026

He argued that removing LTCG for individuals would help boost household wealth, reduce speculative trading, and encourage a shift in savings from gold and real estate into equities.

“My demand: Make Long Term Capital Gain Tax on equities NIL for individual investors,” Chadha said.

What Is STT?

Securities Transaction Tax (STT) is a direct tax levied on the purchase and sale of securities conducted through recognised stock exchanges. It applies to equity shares as well as derivatives such as futures and options. The tax is deducted at the time of the transaction, irrespective of whether the investor makes a profit or incurs a loss.