Government revenue from capital gains tax (CGT) fell by 54.42 percent in the first two months of the current fiscal year, amid a sharp decline in share transactions in Nepal’s secondary market.
According to government data, CGT collection stood at Rs 1.25 billion between mid-July and mid-September of fiscal year 2026/27, down significantly from Rs 2.75 billion collected during the corresponding period of fiscal year 2025/26.
The decline has been attributed primarily to reduced trading activity in the secondary share market. Amid weak investor confidence, daily turnover in the stock market fell to as low as Rs 2.5 billion during the review period.
Data from CDS and Clearing Limited show that CGT collection amounted to Rs 632.74 million in the second month alone, an increase of Rs 7.78 million from the Rs 624.96 million collected in the previous month.
The decline in tax revenue comes after the government increased the CGT rate on share transactions through the budget for the current fiscal year. The higher tax burden, combined with continued weakness in the stock market, affected trading activity during the review period.
Following the prolonged decline in the share market, the government reduced CGT rates on share transactions last week.
Under the revised arrangement, a 3.5 percent tax is applicable to profits earned from the sale of shares held for up to one year, while a 5 percent tax is imposed on profits from shares held for more than one year.
The reduction in CGT rates was introduced as the government sought to address concerns surrounding the declining share market activity and its impact on investors and market transactions.
