CGT collection jumps to more than double to Rs 1.29 billion in a month

KATHMANDU, Feb 21: The government collected Capital Gains Tax (CGT) worth Rs 1.29 billion from share market transactions last month, more than double the amount collected in the previous month.

According to CDS and Clearing Limited, the government’s revenue collection under CGT increased by Rs 707.6 million between mid-January and mid-February this year compared to the previous month, when CGT collection stood at Rs 584.3 million. The jump in CGT contributions from the share market was due to a surge in turnover in the country’s secondary market, with daily turnover reaching as high as Rs 14.16 billion during the period.

Of the total CGT amount, Rs 898.09 million was collected from short-term stock trading at the Nepal Stock Exchange (NEPSE), while Rs 256.22 million was contributed by long-term investors. Likewise, Rs 137.59 million was generated from institutional investments.

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Year-on-year tax revenue collection under this heading was also Rs 234 million higher than the amount recorded in the corresponding month last year. In the seventh month of the Fiscal Year (FY) 2024/25, the government collected Rs 1.057 billion under CGT.

In total, government revenue from CGT on secondary market transactions was recorded at over Rs 5.88 billion in the first seven months of the current FY, which was, however, 46 percent less than the amount collected during the same period last year. During the corresponding period of FY 2024/25, CGT collection stood at Rs 10.87 billion.

In the first month of the current FY, the government collected CGT worth Rs 2.15 billion. The amount declined successively in the following months due to the impact of the Gen Z movement. CGT collection fell as low as Rs 243.65 million in one month between mid-September and mid-October.

Short-term investors are required to pay 7.5 percent tax on profits earned within a year, while long-term investors have to pay 5 percent on profits from shares held for longer periods. Institutional investors pay 10 percent CGT on profits earned from share transactions.