KATHMANDU, Sept 15: The government has reversed its decision to raise capital gains tax (CGT) on share transactions after the country’s stock market continued to nosedive following the hike introduced in the budget for Fiscal Year (FY) 2026/27.
The Ministry of Finance (MoF), through the announcement of the “Capital Market Strengthening and Revitalization Action Plan 2026,” has capped CGT on share transactions at a maximum of five percent—half of the previously implemented 10 percent.
According to the action plan, for shares listed on the Securities Board of Nepal (SEBON), the tax rate for individuals will be 3.75 percent of the gain amount for holdings retained for more than 365 days, and 5 percent for holdings retained for 365 days or less.
Why Ncell paid the CGT?
Earlier, amid a slowdown in the stock market, the government had raised CGT to 7.5 percent and 10 percent from 5 percent and 7.5 percent for short- and long-term investors, respectively. Stockbrokers said the move triggered a sharp decline in share transactions and eroded investor confidence.
The government has also shortened the mandatory holding period for investments made by banks and financial institutions in the secondary securities market to 45 days, down from six months. The action plan requires Nepal Rastra Bank to direct boards of these institutions to formulate investment policies aimed at mitigating speculative risks.
As part of immediate reforms, SEBON will issue guidelines on general eligibility criteria for initial public offerings (IPOs) in the primary securities market. The action plan mandates SEBON to implement these measures by mid-January 2027. Broader reforms will include eligibility criteria, price discovery mechanisms, and securities allotment systems for public offerings across sectors such as hydropower, manufacturing, hospitality, tourism, agriculture, and pharmaceuticals.
The MoF stated that SEBON will also announce policies to develop instruments including the bond market, money market, and exchange-traded funds (ETFs), while transforming mutual funds into professional, diversified, transparent, risk-aware, and technology-driven investment vehicles. SEBON is tasked with establishing the necessary guidelines and infrastructure by mid-December 2026.
Plans are also underway to strengthen the securities brokerage business, transforming it into a modern, professional, and technology-friendly service provider in line with international standards.
The action plan outlines provisions for margin lending, intraday trading, securities lending and borrowing, and short selling. The MoF said it will immediately proceed with restructuring the Nepal Stock Exchange (NEPSE) in line with recommendations from a government task force report submitted last year.
Additionally, the plan calls for revising NEPSE’s indices. While the existing NEPSE index will remain as an “All Equity Index,” a new fundamental securities market index will be developed based on indicators such as tradable shares, market capitalization, company financial health, trading liquidity, corporate governance, and information disclosure.
