Budget 2026: Equity tax relief, avoiding transaction levy hike & more; here’s what market participants want

As the Union Budget 2026-2027 draws closer, many market participants are urging the government to rethink capital market taxation and not increase the transaction levies. Ahead of finance minister Nirmala Sitharaman’s Budget presentation on February 1, investors and brokerage firms have pitched for measures, they believe would make long-term investing more attractive, particularly for retail participants.One of the major demands is relief on long-term capital gains (LTCG) from equity investments. Market stakeholders seek the tax-free exemption limit raised, arguing that the current threshold offers limited comfort to small and long-term investors. JM Financial Services, in its budget proposals, has called for the exemption limit on equity LTCG to be increased from Rs 1.25 lakh to Rs 2 lakh. The firm has also recommended a uniform definition of “long term,” 12 months, across asset classes such as equity, debt, gold and real estate, saying this would simplify the tax structure and improve clarity. Another proposal from the brokerage is to permit capital losses to be adjusted against income from other heads. Concerns have also been raised over transaction-related levies, with market participants warning against any further hikes. Dhiraj Relli, managing director and chief executive officer of HDFC Securities, said stakeholders favour keeping the securities transaction tax on cash equity trades lower than that on derivatives to discourage speculative activity and promote longer-term investment. He further suggested that only the profit element of share buybacks should be taxed and that dividend tax rates for domestic investors be aligned with those for non-resident Indians (NRIs). Tejas Khoday, chief executive officer of FYERS, also urged the government not to increase STT any further. According to him, cutting both long-term and short-term capital gains tax to 10% would substantially increase retail investor participation. Khoday added that import duties on gold and silver should not be raised again, pointing out that these commodities continue to serve as important hedges against equity market swings and rupee weakness. Separately, the National Stock Exchange and the BSE will remain open for live trading on Sunday, February 1, the day the Union Budget is presented.