State Bank of India Research Estimates Abolishing Long-Term Capital Gains Tax Would Cost Fifty Thousand Crores

SBI Research has published estimates indicating that the complete abolition of the long-term capital gains tax would cost the exchequer between Rs 40,000 crore and Rs 50,000 crore in the financial year 2027. This projected revenue impact stands substantially below the Rs 1.3 lakh crore gathered by the government in the financial year 2025. Capital gains tax collections fluctuate based on secondary market trading volumes, equity index appreciation, and foreign institutional investor capital flows.

Weaker market performance and sustained overseas capital outflows reduce taxable gains, diminishing the government's actual tax realization from equity investments. When expected collections drop, fiscal policymakers gain greater flexibility to consider tax rationalization measures without jeopardizing overall fiscal deficit targets. Tax consultants and finance professionals should monitor upcoming Union Budget announcements and fiscal policy statements for any potential changes to capital gains taxation.

Investors must evaluate how tax structure modifications could alter net portfolio returns across equity and mutual fund holdings. Bottom line: understanding fiscal revenue estimates helps investors anticipate structural tax reforms affecting domestic capital markets.