Capital Gains Tax Collection Declines Amid Stock Market Fluctuations

Kathmandu: During the first eight months of the current fiscal year, the government collected over NPR 644.1 million in capital gains tax (CGT) from the stock market. According to the CDSC, the highest collection occurred in Saun, with more than NPR 215 million in tax collected. Since then, the monthly collection has shown a declining trend despite fluctuations. Bhada, Asoj, Kartik, Mangsir, and Poush recorded tax collections of NPR 60 million, 24 million, 38 million, 63 million, and 58 million respectively, while Magh saw over NPR 129 million collected.In Falgun, only NPR 55.15 million was collected, a significant drop compared to Magh. The largest share of this collection came from short-term individual investors, contributing over NPR 32.06 million. Long-term investors contributed NPR 17.07 million, while institutional investors contributed around NPR 6.02 million, indicating strong short-term activity but weak long-term and institutional participation.Under current provisions, individual investors pay 5–7.5% CGT, while institutional investors pay 10%. Shares held for over a year are taxed at 5%, and those held for less than a year are taxed at 7.5%. The fluctuations in the stock market directly affect capital gains tax collection, with revenue increasing when the market is active and declining when trading slows.