Nepal Stock Exchange (Nepse) - sole secondary market of the country - stated that Rs 41.25 million was collected as CGT - a tax that should be paid on the profit in stock transaction - during the period from mid-July to mid-January this year. The CGT amount was Rs 42.23 million in the corresponding period last year. The CGT rates have been set at 10 percent and 5 percent of the particular transaction amount for corporate and individual share transactions respectively. [break]
"CGT collection declined during the last six months ending mid-January due to a fall in the price of shares. And, existing provision to levy CGT on profit on sales of rights and bonus shares at the prices higher than the base prices of shares of different companies also dragged down CGT collection despite a rise in number of shares, number of transactions and transaction volume," share analyst Rabindra Bhattarai told Republica on Saturday.
During the period, Tax Deduction at Source (TDS) from brokers´ commission income rose to Rs 8.44 million from Rs 6.67 million last year.
According to existing rules, one percent commission can be collected for the transaction amount up to Rs 50,000, 0.9 percent for transaction worth between Rs 50,000 and Rs 0.5 million, 0.8 percent for transaction amounting from Rs 0.5 million to Rs 1 million and 0.7 percent for transaction valued over Rs 1 million.
Similarly, Nepse commission which is paid at 25 percent of the total commission charged by brokers from investors however went up to Rs 18.77 million from Rs 14.84 million last year. Brokers can collect a commission from clients that ranges between 0.7 and 1 percent, depending on the share transaction amount.
Commission to Securities Board of Nepal (Sebon) that should be paid by investors at 0.015 percent of the total transaction amount, also increased to Rs 1.33 million during the period from Rs 1 million recorded during the same period last year.
Thanks to bulk transaction during the review period, total amount of share transactions and number of shares traded went up to Rs 4.44 billion and 20.82 million units from Rs 3.34 billion and 12.26 million units respectively.
During the period, number of transactions increased to 155,482 from 137,393. However, market capitalization - total worth of listed shares in Nepse - dropped to Rs 294 billion on January 16, 2012, from Rs 337.35 billion on July 17, 2011.
One of the bulk transactions recorded during the period was the sale of entire stake under its ownership in Soaltee Hotel by Oberoi Hotels Pvt Ltd to a Nepali firm on November 15, 2011. As many as 1,020,144 shares worth Rs 142.82 million were sold by the international hotel chain to Sibkrim Land and Industries of the NE Group.
In the largest-ever inter-company share trading, the Khetan Group sold out its entire stake (22 percent) in Bottlers Nepal Ltd (Balaju), the maker of Coca Cola carbonated drinks in Nepal, to Gorkha Brewery, a company whose 90 percent stake is owned by Danish multinational brewer giant Carlsberg Breweries.
On July 18, the leading Nepali business houses sold 428,805 units of shares worth Rs 725.1 million on the first day of the new fiscal year when reduced Capital Gain Tax (CGT) came into effect. "Major transactions involving big corporate buy-outs pushed the transaction volume and traded shares during the review period," said Bhattarai.
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