Detailed Analysis of Capital Gains Tax Collection in the Nepali Stock Market for Sawan

The capital gains tax collection from the Nepali stock market for the month of Sawan 2025 has been notably high, reflecting a strong month of stock market activity. The Central Depository System (CDSC) reported that a total of NPR 2.15 billion (215.75 crore) was collected in Sawan, a considerable increase from the previous year's collection of NPR 1.33 billion (133.02 crore) for the same month.

This surge in capital gains tax collection is largely attributed to the high market activity and trading volumes seen in the month of Sawan, where the NEPSE index reached its peak of 3002 points. However, despite the slight decline in the index to 2770 points by the end of the month, the tax collection remained strong, indicating the market's resilience.

The monthly capital gains tax collection over the past year provides an insightful perspective on the stock market’s performance. The following are key details:

1. (August) – This month saw the highest capital gains tax collection of NPR 2.57 billion (257.94 crore), indicating significant market movement during this period.

2. Asar (June) – The collection for Asar was NPR 586.5 million (58.65 crore), reflecting a steady market performance.

3. Kartik (October) – A healthy NPR 758.7 million (75.87 crore) was collected in this month, showing consistent investor activity.

4. Magh (January) – The tax collection for Magh was also substantial, amounting to NPR 105.7 million (10.57 crore).

5. Poush (December) – NPR 58.07 million (5.8 crore) was collected, showing relatively lower yet consistent activity.

6. Falgun (February) – A total of NPR 104.06 million (10.4 crore) was collected in Falgun.

7. Baisakh (April) – The collection for this month reached NPR 122.92 million (12.29 crore).

8. Jestha (May) – With NPR 117.82 million (11.78 crore), Jestha also recorded a fair amount of tax collection.

9. Ashar (June) – This month’s collection stood at NPR 127.12 million (12.71 crore), continuing the positive trend.

10. Sawan (July) – NPR 215.75 crore marked a significant contribution for this month.

The capital gains tax is directly linked to the performance of the stock market. In Sawan 2025, several factors influenced the high tax collection:

• High Market Activity: The Nepali stock market, particularly in Sawan, saw high trading volumes, which led to substantial profits for investors. The NEPSE index reaching over 3000 points played a crucial role in the overall growth in tax collection.

• Investor Confidence: Despite the market correction, with the NEPSE index now at 2770 points, investors continued to trade actively, contributing significantly to the tax revenue.

• Government and Policy Impact: The government's policies and regulations regarding capital gains tax rates (7.5% for holding periods less than a year and 5% for holding periods longer than a year) have continued to support the overall market behavior.

For comparison, Sawan 2024 saw a collection of NPR 1.33 billion (133.02 crore), reflecting a growth trajectory. Moreover, the overall capital gains tax collection for the fiscal year 2024/25 amounted to NPR 16.54 billion (1.6544 billion). The tax structure implies that the 7.5% tax applies on profits made from shares held for less than a year, while a 5% tax applies for shares held for over a year. This tax structure is crucial in shaping the trading patterns of investors and their decisions to hold or sell their stocks.

The months showing a strong performance in tax collection like Bhado (August), Sawan (July), and Ashar (June) coincided with periods of intense trading activity and growth in stock prices. These months consistently produced a higher tax revenue due to the significant volume of trades executed by investors capitalizing on market movements.

The data suggests that Sawan 2025 experienced substantial growth in capital gains tax collection, likely due to increased investor participation, higher stock market activity, and a general increase in the number of profitable trades. The capital gains tax collection this year is expected to rise further, with strong economic performance and market sentiment driving growth.

In the long term, the robust tax collections not only benefit the national economy but also reflect growing investor confidence in the Nepali stock market. The healthy year-on-year growth trajectory in capital gains tax collection is a positive indicator for the future of the market and the economy as a whole.