Revisiting Capital Gains Tax on Securities in India

India has one of lowest tax-gross domestic product ratios in the world. There is a need to utilise every tax instrument, including the capital gains tax on securities, to broaden the tax base. Comparing tax-GDP ratio and capital gains tax on securities across G-20 countries, the paper argues for eliminating the distinction of long-term and short-term capital gains classification and move towards progressive taxation of both. Estimates for revenue potential of the desired capital gains tax regime further substantiate the argument. Revenue loss estimates, on account of Double Tax Avoidance Agreement with respect to capital gains, with low tax jurisdictions like Mauritius and Singapore, are provided to give a comprehensive view with respect to capital gains tax policy in India.