Budget 2026 wish list: Gurmeet Chadha seeks LTCG relief, special lending rates for gold and silver

The Union Budget, presented annually by the Finance Minister, is a pivotal document outlining the government's financial plans, revenue generation strategies, and expenditure allocations for the upcoming fiscal year. These budgets are not merely accounting exercises; they are powerful tools for economic steering, influencing everything from inflation and employment to investment and social welfare. Pre-budget consultations, such as the one involving Gurmeet Chadha, are a crucial part of this process, allowing various stakeholders – from industry leaders and economists to trade unions and civil society groups – to submit their recommendations. These inputs help the Ministry of Finance gauge public and expert sentiment, identify pressing economic challenges, and refine policy proposals to foster inclusive growth and stability.

Gurmeet Chadha, a prominent financial expert, has put forth several key recommendations for Budget 2026, targeting financial stability and investor-friendly reforms. The most significant of these is the call to reduce the Long Term Capital Gains (LTCG) tax on equities to 10%. Currently, LTCG on listed equities and equity-oriented mutual funds is taxed at 10% without indexation if the gains exceed ₹1 lakh in a financial year, provided Securities Transaction Tax (STT) has been paid. For other assets like debt instruments or real estate, LTCG is typically taxed at 20% with the benefit of indexation. Chadha's proposal aims to make equity investments more attractive, encouraging greater participation from both domestic and foreign investors. The rationale is that a lower tax burden would incentivize long-term saving and investment in productive assets, potentially leading to increased capital formation and economic growth. This move could also help channel household savings away from less productive assets and into the formal financial system.

Another critical recommendation focuses on the monetisation of gold and silver. India has a deep cultural affinity for gold, leading to significant household holdings of the yellow metal, often lying idle. The government has previously attempted to tap into this resource through schemes like the Gold Monetisation Scheme (GMS), launched in 2015, and the Sovereign Gold Bond (SGB) Scheme. Chadha's suggestion likely advocates for further incentives or reforms to these schemes, or perhaps new mechanisms, to encourage individuals to deposit their idle gold with banks. This would serve multiple purposes: reducing India's reliance on gold imports (which significantly impacts the Current Account Deficit), recycling domestic gold into productive uses, and formalizing a substantial portion of the economy. Similarly, promoting silver monetisation would extend these benefits.

Finally, Chadha has called for incentives for the affordable housing sector. Affordable housing is a cornerstone of social welfare and economic development, directly impacting the quality of life for millions. The government's 'Housing for All' initiative, primarily driven by the Pradhan Mantri Awas Yojana (PMAY) launched in 2015, aims to provide housing to all eligible urban and rural poor. Incentives could include enhanced tax deductions for home loan interest and principal repayment (currently Section 80C and 24(b) of the Income Tax Act, 1961), stamp duty reductions, or interest subvention schemes. Such measures not only make housing more accessible but also stimulate demand in allied industries like cement, steel, and construction, creating jobs and boosting economic activity.

Key stakeholders in these recommendations include the Union Government (specifically the Ministry of Finance and the Central Board of Direct Taxes, CBDT), which is responsible for formulating tax policy and the budget. Investors, both retail and institutional, are directly impacted by LTCG changes, as are mutual fund houses and stockbrokers. The banking sector plays a crucial role in gold monetisation schemes, while real estate developers, construction companies, and homebuyers are significant beneficiaries of affordable housing incentives. Economists and financial analysts, like Gurmeet Chadha, serve as crucial intermediaries, providing expert analysis and guiding policy discourse.

These proposals hold significant implications for India. A reduction in LTCG could boost investor confidence, attract more capital to Indian markets, and potentially increase tax collections through higher transaction volumes, even with a lower rate. Enhanced gold and silver monetisation could help manage India's trade balance by curbing imports and strengthening the rupee. Affordable housing incentives would address a critical social need, improve living standards, and provide a fillip to the construction sector, a major employer. Historically, India has seen various policy shifts regarding capital gains tax, notably the reintroduction of LTCG on equity in Budget 2018 after its abolition in 2004, reflecting the government's evolving approach to balancing revenue needs with market stimulus. The push for financial inclusion and formalization of the economy aligns with broader government goals.

Constitutionally, the Union Budget is presented under Article 112, which mandates the presentation of the 'Annual Financial Statement' to Parliament. Taxation powers are derived from Article 265, stating that "No tax shall be levied or collected except by authority of law." Changes to LTCG would be implemented through amendments to the Income Tax Act, 1961. Policies like affordable housing align with the Directive Principles of State Policy (DPSP) under Part IV of the Constitution, particularly Articles 38, 39, and 43, which advocate for social welfare, adequate means of livelihood, and a decent standard of living. Future implications suggest a continued focus on balancing fiscal prudence with growth-oriented policies. The government will need to carefully weigh the revenue implications of tax cuts against the potential boost to economic activity and investment. These recommendations highlight the ongoing effort to create a more robust, stable, and inclusive Indian economy.