Budget 2026: Investors Demand Tax Rationalization for Capital Markets

• Investors are seeking tax rationalization in Union Budget 2026 to boost capital market participation, especially from foreign institutional investors (FIIs).
• Key demands include reducing long-term capital gains tax to create a level playing field for foreign investors and lowering securities transaction tax (STT) on cash market trades.
• SEBI is considering proposals to reduce margins in the cash segment and has received suggestions to increase trading volumes, including strengthening stock lending/borrowing and easing margin requirements.
• Rationalization of dividend taxation is also a major demand, as current rules lead to double taxation, and changes to share buyback taxation are also sought.
• Sunny Agrawal of SBICap Securities highlights the market's need for tax rationalization to restore foreign investor participation and improve market depth.

Why It Matters: Investors urge Budget 2026 to rationalize capital gains, STT, dividend, and buyback taxes to revive market activity.