May 25: The government collected capital gains tax (CGT) of Rs 135.48 million in the month of Baishakh (mid-April to mid-May). The tax was collected from individual and institutional investors who sold securities bond at a profit.
According to CDS and Clearing Limited (CDSC), there has been a decrease in tax collection in the same period this year due to the decline in turnover and share price in the secondary market of securities. According to CDSC spokesperson Suresh Neupane, capital gains tax collected from the securities market is less by Rs 37.3 million in the review period compared to the previous month (mid-March to mid-April). Previously, more than Rs 172.8 million was collected as capital gains tax.
From mid-April to mid-May, CGT of more than Rs 61.2 million was collected from short-term investors and Rs 59.99 million from long-term investors. According to Neupane, more than Rs 14.3 million of such tax was collected from institutional investors.
From mid-March to mid-April, more than Rs 75.6 million of CGT was collected from short-term investors and Rs 84.7 million from long-term investors. Neupane said that more than Rs 12 million capital gains tax was collected from institutional investors.
Investors of the securities market have paid more than Rs 10 billion in taxes to the government in the past one year. According to CDSC, the government collected more than Rs 10.35 billion capital gains tax from securities traders in the fiscal year 2021/22.
Investors say that government income can be increased by further developing and expanding the securities market amid current economic crisis. Tara Prasad Fullel, acting president of the Stock Brokers Association of Nepal (SBAN), says that tax collection from this sector should be prioritized by operating two stock exchanges. He said that as the income of the government declined along with the share price and turnover, attention should be paid to the expansion of this sector.
Fullel said that the capital gains tax for individual investors should be at most 5 percent. He said that 5 percent of short-term and 3 percent of long-term capital gains tax should be exempted for individuals.
Securities traders have to pay capital gains tax up to 10 percent on profits. Institutional investors are charged 10 percent and individuals are charged a maximum of 7.5 percent capital gains tax. There are two types of capital gains tax on individuals. Those who hold shares for more than 1 year and sell them are considered long-term investors and those who sell them in less than 1 year are considered short-term investors. Short-term investors have to pay 7.5 percent capital gains tax and long-term investors have to pay 5 percent capital gains tax.