Government Collects Over NPR 704.25 Million in Capital Gains Tax in Jestha

Significant Revenue from Individual and Institutional Investors

In the month of Jestha, the government collected over NPR 704.25 million in capital gains tax. This tax was collected from both individual and institutional investors in the capital market.

According to CDS and Clearing Limited (CDSC), the capital gains tax collected in Jestha showed a significant increase compared to the previous month of Baisakh. In Baisakh, the collection was NPR 362.74 million, whereas in Jestha, it surged to over NPR 704.25 million.

Contributions from Short-term and Long-term Investors

CDSC reports that the majority of the tax, amounting to over NPR 385.59 million, was collected from short-term investors in Jestha. Long-term investors contributed more than NPR 233.75 million, while institutional investors paid over NPR 84.90 million in capital gains tax.

Increase in NEPSE Index and Trading Volume

Investors in the securities market paid the tax based on their profits from transactions made in Jestha. The increase in the NEPSE index and the trading volume compared to Baisakh led to higher tax collection.

Capital Gains Tax Regulations

According to current regulations, investors in the secondary securities market must pay up to 10% in capital gains tax on their profits. Institutional investors are required to pay 10% capital gains tax, while individual investors must pay up to 7.5%.

Investors holding securities for more than one year are classified as long-term investors, whereas those holding for less than a year are considered short-term investors. The government has set the capital gains tax rate at 7.5% for short-term investors and 5% for long-term investors.

The system of taxing capital gains from securities transactions has been in place in Nepal since Shrawan 1, 2058 BS.

Conclusion

The substantial increase in capital gains tax collection in Jestha reflects the active participation and profitability of investors in the securities market. The dominance of short-term investors is evident from their significant contribution to the tax revenue. This surge in tax collection highlights the growing confidence of investors in the market and the overall positive performance of the securities market during the period.