The Union Budget is just a day away, and in the run-up to it, surfaced the long-simmering debate around capital gains taxation. This time sparked by a blunt intervention from market veteran Gurmeet Chadha.
In a post on X, Chadha questioned the logic of taxing equity investments at par with gold and real estate, arguing that the three asset classes operate in fundamentally different realities-especially when it comes to cash usage and risk.
There is a fundamental issue in keeping equity taxation at par with gold and real estate.
A Investor bought a 20 cr plot in Delhi/ noida . Pays 10 cr in cash and 10 cr in cheque..
After 2 years , sells the entire thing in cheque… converts 10 cr into white at 12.5% tax (…
— Gurmeet Chadha (@connectgurmeet) January 29, 2026
The ‘Cash Conversion’ Problem
Chadha illustrated his point with an example familiar to many in the real estate market. An investor buys a Rs 20 crore plot in Delhi-NCR, paying Rs 10 crore in cash and Rs 10 crore via cheque. Two years later, the property is sold entirely through banking channels. The outcome? Half the investment effectively turns from black to white, taxed at just 12.5% under long-term capital gains (LTCG).
According to Chadha, applying the same LTCG rate to such transactions and to equity investments ignores this embedded cash component. “Real estate and gold have an in-built tax arbitrage,” he implied, while equity remains entirely within the formal financial system from entry to exit.
Why Equity Is Different
The crux of Chadha’s argument is that equity represents “all-white, risk capital.” Unlike property or physical gold, equity investments leave a digital trail, are fully reported, and are directly exposed to business and market risk. Treating them at par with assets that can absorb or legitimise cash flows, he argues, penalises transparency rather than rewarding it.
This differentiation becomes especially relevant as policymakers attempt to deepen India’s capital markets and channel household savings away from physical assets and into productive financial instruments.
A Simpler, Tiered Tax Framework
Ahead of the Budget, Chadha proposed a clean, predictable LTCG structure:
- Equity: 5% flat after two years
- Real estate & gold: 12.5% after two years
- FDs & bonds: 12.5% after two years
Such a framework, he suggested, would reflect risk, liquidity, and compliance differences while reducing ambiguity for investors.
Bigger Implications For Capital Flows
Beyond domestic savers, Chadha linked tax predictability to India’s broader growth ambitions. Lower, differentiated equity taxation could encourage long-term savings and improve the stability of foreign portfolio investor (FPI) flows-critical as India looks to fund infrastructure, manufacturing, and energy transitions.
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