The government collected Rs 2.57 billion in capital gains tax (CGT) from share transactions between mid-August and mid-September. This collection comes despite a significant 11% drop (over 300 points) in the secondary market index during the same period. Stockbrokers noted that many investors sold their shares to capitalize on previous price surges, contributing to this notable tax revenue.
However, the CGT collected last month was 39% lower than the Rs 4.23 billion collected in the previous month. Following a bullish trend lasting over a month, the Nepal Stock Exchange (NEPSE) fell to 2,688.53 points from over 3,000 points.
Of the total CGT collected, Rs 733.9 million came from long-term investors who held shares for over a year, while Rs 1.53 billion was collected from short-term investors. Individual investors face CGT rates of 5% for long-term holdings and 7.5% for short-term sales, while institutional investors are subject to a 10% tax.
The CGT collection is closely tied to market capitalization, which dropped to Rs 4.2749 trillion as of mid-September, down Rs 49 billion from the previous month. Despite last month’s decline in share values, investors recorded cumulative earnings of Rs 609 billion in share trading during the first two months of the fiscal year. Overall, the government has collected Rs 6.814 billion in CGT so far this fiscal year.
NEPSE Issues Caution to Investors
In light of the recent market fluctuations, the Nepal Stock Exchange (NEPSE) has warned investors to exercise caution and avoid relying solely on the analyses of self-proclaimed stock analysts on social media platforms like Facebook and Twitter. NEPSE advised investors to conduct their own assessments to mitigate risks associated with their investments.
Concerns about potential manipulation by large investors have prompted the regulatory body to encourage caution and due diligence in investment decisions.
