The government collected Rs 4.85 billion in capital gains tax (CGT) from share trading in the secondary market from mid-July 2023 to mid-June 2024, according to CDS and Clearing Limited (CDSC).
The stock market struggled with low investor confidence, but recent months saw improvement due to more lenient margin lending policies by Nepal Rastra Bank. CGT collections varied significantly, peaking at Rs 972 million between mid-January and mid-February and hitting a low of Rs 84.15 million from mid-October to mid-November.
By mid-February, collections reached Rs 2.86 billion, with an additional Rs 1.99 billion collected over the next four months.
Current CGT rates are 5 percent for shares held over a year and 7.5 percent for shares sold within a year for individual investors, and 10 percent for institutional investors.
Historical CGT revenue varied, with a peak of Rs 14.13 billion in FY 2020/21, dropping to Rs 10.35 billion the following year and further to Rs 2.97 billion in FY 2022/23.
CGT revenue is linked to market capitalization, which rose by eight percent from Rs 3.082.52 trillion in mid-July 2023 to Rs 3.322 trillion. The highest market capitalization was Rs 4.468 trillion in August 2021, falling to Rs 2.869 trillion by mid-July 2022.
A task force, led by Former Finance Minister Prakash Sharan Mahat, recommended increasing CGT rates to 10 percent for stocks sold within a year and 7.5 percent for stocks held longer, amidst calls for rate reductions from investors.
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