Tax reforms fuel equity inflows

Tax reforms and supportive policy measures are expected to sustain strong domestic inflows into Indian equity markets, according to a report by J.P. Morgan. Recent changes in taxation have made equity investments more attractive compared with other financial instruments, encouraging households to allocate more savings towards the stock market.

Equities currently attract a 12.5% long-term capital gains tax, while policy changes such as the removal of indexation benefits for debt instruments, taxation of certain insurance policy proceeds and slab-based taxation for debt mutual funds have improved the relative appeal of equities. 

These regulatory changes, combined with rising participation through SIPs, are likely to support steady domestic inflows even during periods of market volatility.  Domestic investors have remained resilient despite muted benchmark index returns over FY25 and FY26, signalling a structural shift in investment behaviour rather than short-term market sentiment.

—Agencies