The government’s revenue collection from capital gains tax (CGT) recorded a sharp decline last month, dragged down by a significant fall in share transactions.
According to CDS & Clearing Limited, investors paid only Rs 601.49 million in CGT between mid-August and mid-September of the current fiscal year (FY), a steep 77 percent drop compared to Rs 2.57 billion collected during the same period last year.
The figure also marked a sharp fall from the Rs 2.15 billion collected in the previous month (mid-July to mid-August), amounting to less than one-third of that total.
Under the existing rules, investors pay 7.5 percent CGT on profits from shares sold within a year and 5 percent on shares held for longer periods. Government earnings from CGT typically surge when turnover at the stock market rises.
However, stock activity has slowed sharply. The Nepal Stock Exchange (NEPSE) index, which stood at 3,002.07 points at the end of last fiscal year, slid to as low as 2,672.25 points over the following two months. Daily turnover also plunged to just Rs 4.09 billion during the review month.
CGT collection had reached a record Rs 4.24 billion in the first month of FY 2024/25, helping push overall receipts under this heading to Rs 16.54 billion for the year. But the latest downturn signals weakening investor activity, raising concerns about the government’s revenue outlook for the current fiscal year.
