KATHMANDU, July 3: The government’s tax collection from the stock exchange market has increased multifold in the first 11 months of the current fiscal year along with an upsurge in the transaction amount in the secondary market during the period.
According to Nepal Stock Exchange (Nepse), the government collected tax revenue worth Rs 13.33 billion during mid-July 2020 and mid-June 2021, a record high amount from Nepse in around three decades of its inception. The amount is more than double the amount collected in the past five years from the share market. During fiscal years 2015/16 and 2019/20, the secondary market contributed a total of Rs 6.59 billion to the tax revenue.
The notable rise in government tax collection is due to an increased transaction volume in the review period when the daily transaction amount escalated to a record high of around Rs 20 billion and the Nepse index also crossed 3,000 points. The government collects capital gains tax, dividend tax, income tax and advance tax from the stock exchange market.
Out of these, the government makes good revenue from the capital gains tax from the secondary market. According to the law, an institutional investor pays 10 percent in capital gains tax. For the individual investors, 7.5 percent tax is applicable if a company's share is sold within one year of purchase while the rate of capital gains tax is five percent if the share is sold after one year of purchase.