Aam Aadmi Party leader Raghav Chadha on Tuesday called for lowering taxes on capital gains, saying that high taxation discourages long-term investment.

Speaking in the Rajya Sabha, Chadha said that investments in India are highly taxed and suggested providing incentives on interest earned from bank saving accounts.

When it comes to taxation, long-term investments in the country are being treated as short-term speculation, said the MP, adding that this “needs to be changed”.

He pointed out that amid uncertain international circumstances, foreign investors pulled out approximately Rs 1.60 lakh crore from Indian equities between January and December.

Against this backdrop, domestic investors injected around Rs 7 lakh crore into the market, helping stabilise Indian equities, added Chadha.

“A basic principle of economics is to encourage investments,” he said.

The Aam Aadmi Party leader told Parliament that in view of this, “patient capital” must be respected and not penalised. “By over-taxing investments, we are disincentivising wealth creation,” he said.

He also pointed out that the middle class in the country usually invests in savings accounts or fixed deposits.

Outlining his suggestions, Chadha called for increasing tax-free limits on income from bank interest.

He further said that any investor who has put their money in fixed deposits for more than five years should also be given tax concessions.

Chadha also suggested bringing a Tokenisation bill, reported PTI. The Aam Aadmi Party MP contended that this would enable fractionalised ownership of assets through digital tokens.

Asset tokenisation is one of the most transformative technological financial innovations of the 21st century, the news agency quoted him as saying.

Under the proposed bill, real estate, infrastructure projects and commodities, among others, would be divided into digital tokens.

“This tradable token can be used by anyone for buying or selling and make profits,” said the Aam Aadmi Party leader. “This means that these big assets will not only be available for billionaires but for the common man of the country who can buy big assets and taste big returns.”

Through this legislation, better returns will likely be available to the middle class, said Chadha.

Chadha described the September reforms in the Goods and Services Tax system as “landmark”.

It was important that the pass-through benefit was fully passed on to consumers by private companies, he added.

The new GST system, which entails a primarily two-rate structure of 5% and 18% tax slabs, took effect on September 22 for most items.