KATHMANDU, Dec 22: The government’s earnings from capital gains tax (CGT) from share transactions declined 56.39 percent in the first five months of the current fiscal year (FY) compared to the same period of the last FY.
According to the CDS and Clearing Limited, the government’s revenue collection under the heading declined by Rs 5.19 billion during mid-July and mid-December of this FY. During the review period, the CGT collection from the stock exchange reduced to Rs 4.01 billion from Rs 9.20 billion.
While almost half of the current FY has passed, the CGT collection stood at only one-fourth of the amount collected in the entire period of the last FY when the amount was recorded at Rs 16.54 billion.
Why Ncell paid the CGT?
As per stockbrokers, the decline in the CGT collection was mainly due to the decline in share transactions in the review period. While the stock trading was halted for over a week after the Gen Z movement, the depletion in the investors’ confidence largely affected the trade volume. As a result, the daily turnover fell to as low as Rs 2.87 billion.
According to analysts, the investors’ confidence of late has been eroded by some groups, identifying themselves as Gen Z activists, seeking 10 percent free stakes of hydropower to them and locals affected by the projects. In addition, the persisting challenges of banks and financial institutions and increased financial liabilities of insurance companies due to the damages caused by violence and natural disasters have added to the problem.
Short-term investors are required to pay 7.5 percent tax on profits earned within a year while long-term investors have to pay 5 percent on profits out of the shares held for longer periods. The government’s earning from CGT surges when there is an increase in turnover at the stock market.
In the last month alone, the stock trading platform contributed a mere Rs 629.8 million to the state coffers, compared to Rs 1.04 billion in the corresponding month of last FY. During mid-November and mid-December this year, CGT of Rs 170.1 million was collected from long-term individual investors and Rs 414.3 million from short-term investors, while Rs 45.3 million was contributed by institutional investors.
The revenue generated from CGT in the fifth month was far less compared to Rs 2.15 billion in the first month of FY 2025/26. During the review period, the Nepal Stock Exchange index also plunged below 2,600 points from over 3,000 points.
