India's finance minister on Sunday said the government does not plan to impose a long-term capital gains tax, a day after Prime Minister Narendra Modi suggested that people earning from financial markets must make a "fair contribution" to nation building.

Modi's comments were interpreted by some local media as a pitch for higher taxes on income from capital markets.

But Finance Minister Arun Jaitley said Modi's speech had been misinterpreted.

"I wish to absolutely clarify that there is no occasion or opportunity for anybody to reach such a conclusion because this is not what the prime minister said," Jaitley told reporters in New Delhi.

"Nor is it the intention of the government as has been reported in a section of the media itself."

Modi on Saturday told an event organised by India's capital markets regulator that his government would continue to follow sound and prudent economic policies.