Sitharaman keeps door open on capital gains tax rethink

Finance Minister Nirmala Sitharaman on Tuesday said the RBI will continue its efforts to prevent excessive volatility in the rupee, which has depreciated "very significantly" over the past year and a half.

She said the rupee has reached a low against the US dollar mainly due to global uncertainties, even though India's macro-economic fundamentals, including forex reserves, are strong and the regulator RBI is ensuring that the domestic currency stays stable. "I am sure there are efforts which the RBI would take further to make sure that rupee doesn't become too volatile," Sitharaman said.

Asked about rationalisation in taxes in the securities market, the minister said the debate around STT and long-term capital gains tax rationalisation is "healthy", and she will "keenly" hear these debates. "We are very close to the Budget, and the preparation for the Budget has started. It may not be the best time for me to say what I will or what I will not consider," she said. Sitharaman further said that the long-term capital gains tax is something on which a lot of people have been commenting, and the issue also came up during her conversation with investors in India and abroad.

"... It's healthy to have this debate, and I will be keenly hearing them," she said.

The Union Budget 2027-28 is likely to be presented on February 1. On the rupee, the minister said the RBI, through its measures, is trying to prevent volatility and not "fix" the rupee level. "So, these efforts from the RBI... will continue not to, as I said, fix the rupee. We would appreciate it if the rupee finds its own (level)," the minister said. The Reserve Bank over the weekend announced a slew of measures to stem rupee fall.

The central bank announced the creation of a special window for oil marketing companies, which will take US dollar demand away from the spot market and tightened rules governing forex derivatives trades to curb speculative bets against the rupee. Sitharaman said the latest measures by the RBI supported the rupee as its value appreciated one per cent on Monday.

On Tuesday, it appreciated to Rs 94.96 in the early trade. India's fundamentals are fine, with sound foreign exchange reserves, she added. The minister said the rupee depreciation is "very significant" over the last one and a half years, stemming mainly from external challenges. "Within the country, we are making sure that we keep the macroeconomic fundamentals sound... fiscal discipline is not going to be a matter which should worry investors.

But as regards the rupee, and as regards the way it is reacting to the ups and downs with the dollar, yes, that's where the challenge is, and we will be attending to it," Sitharaman added. To support the rupee amid the West Asia crisis, the government and RBI in June announced a slew of steps to attract dollars into the country.

To reduce compliance burden for foreign investors in government securities (G-Secs), the government expanded the list of specified securities under the Fully Accessible Route (FAR) to include new issuances in G-Secs.

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