The financial advisor argues that excessive taxation on capital gains penalizes individuals, who take investment risks and dissuades them from viewing India as a wealth-building destination Akshat Shrivastava believes India’s tax policy is discouraging investment. The financial advisor argues that excessive taxation on capital gains penalizes individuals, who take investment risks and dissuades them from viewing India as a wealth-building destination. Citing examples of Hong Kong, Singapore, New Zealand, Malaysia, the UAE, and Thailand — countries with zero or minimal capital gains tax — Shrivastava calls for a policy shift.
In a post on X, he stated, “Capital gains is a risk capital. You invest, via your already taxed capital. So, the subsequent taxation should be low, not high. Making capital gains 0 or low in India is a sensible step. And, encourages people to see India as a wealth building destination.”
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Challenging the argument that high capital gains tax funds social development, he added, “The argument: ‘oh, who will bear the cost of all social development?’ is not a valid reason to penalise people unnecessarily. The logic of taxation needs to be there.”
Earlier, Srivastava had elaborated on why he believes capital gains tax should be eliminated entirely. Breaking it down, he wrote:
"1) You work hard, you make 5Cr (let’s say).
2) You buy a house/stocks worth 5Cr.
3) It goes to 6Cr (so you are 1Cr in profits).
4) You book that and you pay a capital gains tax. So when you make profits, the government takes it.
5) Let’s go back to step 3.
6) If the value of the house drops to 0 (you lose 5Cr), you stop investing."
He also questioned how investors could offset capital losses under such a system.
His post sparked widespread discussion, with many agreeing with his stance. Some, however, proposed a more measured approach. One user on X argued that while lower capital gains tax could attract investors, reducing it too much could worsen economic inequality.
“Unlike consumption or income taxes, capital gains tax predominantly affects wealthier individuals who have the capacity to invest. Reducing it too much could widen economic inequality, as those who rely on wages alone may bear a higher tax burden to compensate for the lost revenue,” the post read.
The user suggested a structured approach. “Countries with low capital gains tax often offset it with other revenue mechanisms, such as high-value-added taxes (VAT) or wealth taxes. Instead of focusing solely on reducing capital gains tax, India should aim for a holistic tax policy that attracts investment while ensuring sustainable revenue generation for national development,” the post added.