In the past month, the government collected Rs 758.7 million in CGT from share transactions, marking an increase of Rs 172.2 million compared to the previous month. This increase is part of a larger trend, with the CGT collection from mid-October to mid-November this year being nine times higher than the same period last year when the government had collected only Rs 84.1 million. The sharp rise in CGT revenue reflects both an increase in trading volumes and a rise in market prices.
Last month, the total turnover in the secondary market was Rs 102.45 billion, indicating robust trading activity. Additionally, the market capitalization of shares increased slightly, from Rs 4.361 trillion to Rs 4.376 trillion, which allowed investors to generate capital gains exceeding Rs 15 billion. These gains were a major factor behind the spike in CGT collections.
As for the tax structure, individual investors are subject to CGT at rates of 7.5% for short-term holdings (stocks sold within one year) and 5% for long-term holdings (stocks held for more than a year). Institutional investors are taxed at a flat rate of 10%. The flexibility shown by banks in providing loans against shares has also contributed to the rise in transactions, as it has made it easier for investors to engage in the stock market. According to reports, Nepal Rastra Bank’s lenient stance on margin lending this year has encouraged banks and financial institutions to increase lending by 17.46% in the first quarter of the fiscal year, amounting to Rs 105 billion in loans.
On a broader scale, the government collected a total of Rs 8.16 billion in CGT between mid-July and mid-November of this year, a sharp increase from the Rs 1.15 billion collected in the same period last year. This growth in CGT revenue reflects an expanding and more active stock market, as well as favorable economic policies supporting investor activity.
In conclusion, the surge in CGT collections is a positive development for the Nepali economy, reflecting both increased investor participation and market growth. The combination of rising stock prices, higher trading volumes, and more accessible financing options has spurred market activity, benefiting both investors and the government’s revenue stream. However, this growth is subject to market fluctuations, so future CGT collections could vary based on broader economic conditions and investor sentiment.
