The CGT collection from trading of shares has taken a beating as the stock market has been in a bearish run for over the last one year. Stock investors are required to pay taxes to the government only after earning profit in the share trading. In the current fiscal year, the stock market has fallen significantly. As most of the investors have suffered losses in share trading, tax collection from stock trading also has declined.
According to CDS & Clearing Limited (CDSC) Spokesperson Suresh Neupane, the revenue collection from the stock trading has decreased due to the decline in the NEPSE index and turnover. "Investors will pay tax only after earning profit. Investors made good profits when the stock market rose to an all-time high in earlier fiscal years. As a result, the revenue received by the government increased last year," he said. The government has been collecting up to 10 percent capital gains tax from the profits earned by investors in the secondary market. As per the existing arrangements, 10 percent CGT is levied on institutional investors in the securities market while it is 7.5 percent for individual investors. Among the individuals, the government collects tax by considering those who hold shares for more than 1 year as long-term investors and those who hold shares for less than 1 year as short-term investors. Short-term investors have to pay a 7.5 percent capital gains tax and long-term investors have to pay a 5 percent capital gains tax. The government had collected an all-time high CGT of Rs 14.06 billion from transactions of shares in FY 2020/21 when the domestic bourse was on a bull run. The amount was only Rs 1.01 billion in FY 2019/20. Secondary market transactions contributed a total of Rs 6.59 billion in tax revenue from FY 2015/16 to FY 2019/20.
