CGT Collection Hits Record High in First Month of Current FY

The government collected a record high capital gains tax (CGT) in the first month of FY 2024/25, with the amount nearing the total collection in the last fiscal year, amid a booming securities market. 

Between mid-July to mid-August this year, the government collected over Rs 4.23 billion in CGT, according to the CDS and Clearing Limited (CDSC), compared to around Rs 5.5 billion collected in the whole FY 2023/24. 

The first month’s CGT collection has surpassed that of the same period in the last fiscal year by Rs 3.83 billion, according to CDSC.

The highest-ever CGT collection remains at Rs 15.54 billion, recorded in the fiscal year 2020/21.

Suresh Neupane, information officer at CDSC, said that the amount was the highest monthly CGT collection from the securities market till date. 

The record comes at a time when NEPSE, the stock market index, surged from 2,230 points to 3,036 points in the period.

Along with the index, daily transaction volumes reached a new high, surpassing Rs 29.95 billion on August 15. 

Market capitalization also hit a new record, exceeding over Rs 4,765 billion. 

These factors contributed to record-breaking CGT collections for the month, experts say.

As the government has been collecting taxes in considerable amounts from over 2.5 million active investors in the share market, calls have risen to bring a long-term policy for their benefits.
Tara Prasad Phullel, the Acting President of the Share Investors Association of Nepal, has urged the government to give tax exemption to individual investors along with institutional investors in capital gains.

Phullel emphasised that setting the capital gains tax at a maximum of 3% for long-term investors and 5% for short-term investors, as commonly requested by investors, would motivate more to invest.

He also called for the removal of the limit for share mortgage loans for individual investors as well.
Nepal's taxation system for securities trading has been in place since July 16, 2001. In the current framework, investors in the secondary market must pay a capital gains tax of up to 10% on their profits. Institutional investors are levied a 10% tax, while individual investors are taxed 7.5%.