Kathmandu, September 14, 2026 (Bhadra 29, 2083) — Government today announced that capital gain tax would only be levied up to the maximum ceiling of 5 percent to the short term investors investing for less than one year period whily the long term investors will have to pay only 3.75 percent of CGT. This CGT will be applicable for only natural persons.
This is 50 percent slash on the prevailing CGT rate of 10 percent for short term investors and 7.5 percent in long term investment.
In its 21 point action plan unveiled today for capital market reform and revival, government has also rolled out it plan for introducing the loss adustment rules.
Loss-adjustment rules will be improved so that losses from disposal of listed securities can be offset against gains in the same income year, with only the net gain subject to final capital gains tax at the applicable rate — to be implemented through reforms to profit/loss trading and settlement calculation.
The Government of Nepal, through the Ministry of Finance, has announced a sweeping 21-point “Capital Market Strengthening and Revival Action Plan, 2083,” aimed at pulling the country’s securities market out of a prolonged slump and rebuilding investor confidence across banking, industry, trade, infrastructure and investment sectors.
Key Measures Announced
1. IPO norms and sector-based pricing. The Securities Board of Nepal (SEBON, referred to as “the Board”) has been directed to immediately issue general eligibility guidelines for companies seeking to raise capital through Initial Public Offerings (IPOs). Under a market-driven pricing system, the Board will formulate sector-specific eligibility criteria, price discovery mechanisms, and a securities book-building system for groups such as hydropower, manufacturing and processing, hotels and tourism, agriculture, and pharmaceuticals — with the related policy and legal reforms to be completed by mid-January 2027 (end of Poush 2083).
2. Debt and money market instruments. To develop the bond market, money market, and Exchange Traded Funds (ETFs), the Board will make mutual funds more professional, diversified, transparent, risk-conscious and technically competent, anchored in long-term investment. A public policy on this is to be issued immediately, with directives and other reforms in place by mid-December 2026 (end of Mangsir 2083).
3. Reform of stockbroker institutions. The Board will immediately publish an institutional reform and strengthening policy for the stockbroking business, aimed at transforming brokers into modern, diversified securities financial service institutions consistent with international practice and standards.
4. Amendments to the Securities Act, 2063. The government will immediately draft a bill to bring “timely” amendments to regulatory and market-infrastructure provisions of the Securities Related Act, 2063 (2006) — paving the way for margin lending, intraday trading, securities lending and borrowing, short-selling and other securities instruments.
5. Restructuring of the Nepal Stock Exchange (NEPSE). Institutional strengthening, structural reform and capacity enhancement of NEPSE will proceed immediately, based on the report submitted by a government-formed taskforce on Poush 25, 2082 (January 2026).
6. New benchmark index. While retaining the current NEPSE index as an All-Equity Index, a new benchmark index — based on factors such as tradable shares, market capitalization, companies’ financial condition, trading liquidity, institutional governance and information disclosure — will be introduced by mid-December 2026 (end of Mangsir 2083).
7. Non-Resident Nepali (NRN) participation. To allow NRNs to invest in the secondary securities market, the Ministry will propose to the Cabinet, by mid-October 2026 (end of Ashoj 2083), the necessary amendments to the Foreign Investment and Technology Transfer Act, 2075, and the Foreign Exchange (Regulation) Act, 2019.
8. Corporate bond market development. While promoting market-based financing alongside bank-based financing, a Corporate Bond Market will be developed, with amendments to existing debenture-related regulations implemented by mid-October 2026 (end of Ashoj 2083).
9. Specialized/thematic bonds. Issuance of green bonds, disaster bonds, social bonds, project-specific bonds and environmental bonds will be encouraged, with a policy covering investment and disclosure requirements for such instruments to be formulated by mid-October 2026.
10. Active secondary market for government securities. The secondary market for treasury bills and development bonds will be strengthened, with a review of transaction fees and preparation of policy and market infrastructure due by mid-October 2026.
11. Share consolidation, splits and buybacks. As allowed under listed companies’ prospectuses and bylaws, the Board — in consultation with stakeholders — will by mid-February 2027 (end of Magh 2083) create the regulatory and legal framework needed to make consolidation/splitting of shares (at prices above or below face value) and buyback of shares from distributable profit practically implementable.
12. Approval of trading-related regulations. Regulations concerning debentures, margin lending, and intraday trading will be approved by the Government/Ministry of Finance and implemented by mid-October 2026.
13. Modernizing the share-purchase system. The system for buying shares will be modernized and brought into operation by mid-January 2027, enabling Board-licensed brokers to extend margin lending for investment as per margin-lending regulations.
14. Investigation powers and private debenture issuance. SEBON will be empowered to investigate securities-related offences, and provisions allowing private companies to issue debentures will be incorporated as amendments to the Securities Act, 2063 move forward.
15. Institutional investor access to primary and secondary markets. By mid-October 2026, relevant bodies will put in place the policy, legal and infrastructural arrangements to ensure institutional investors can enter both markets — including (a) Board-formulated rules and directives for institutional investment policy and business structure, to be ready by mid-December 2026, and (b) facilitation of institutional investors’ participation in the primary market through related policies, rules and directives.
16. Rebalancing institutional investors’ portfolios. To shift institutional investors — such as the Employees Provident Fund, Citizen Investment Trust, Social Security Fund, insurance companies and mutual funds — away from over-reliance on bank deposits, legal, policy and structural facilitation for their investment in securities will be arranged by mid-December 2026.
17. Reform of CDS and Clearing Limited. A study on institutional capacity enhancement and structural reform of CDS and Clearing Limited, which runs the central depository system, will be completed by mid-March 2027 (end of Falgun 2083).
18. Private Equity/Venture Capital (PE/VC) framework. To channel capital toward early-stage enterprises, innovation-driven and technology-focused businesses, SMEs with high growth potential, and high-risk/high-return projects, the Board will — in consultation with stakeholders — prepare, by mid-January 2027, a legal and market framework for PE/VC funds aligned with international best practice, covering categorization, risk-based regulation, fundraising, investment, dividends, capital repatriation and exit processes.
19. Review of bank/FI exposure limits to the capital market. Considering capital mobilization, direct and indirect exposure, interconnectedness, financial stability, systemic risk, liquidity, returns and depositor protection, the Board and Nepal Rastra Bank (NRB) will jointly review existing investment limits, risk weights and collateral-adequacy norms by mid-November 2026 (end of Kartik 2083).
20. Capital gains tax reform. To encourage long-term investment, tax provisions will be revised:
- For natural persons holding listed shares for more than 365 days, capital gains tax will be 3.75%; for holdings of 365 days or less, the rate will be 5%.
- Loss-adjustment rules will be improved so that losses from disposal of listed securities can be offset against gains in the same income year, with only the net gain subject to final capital gains tax at the applicable rate — to be implemented through reforms to profit/loss trading and settlement calculation.
21. Minimum holding period for BFI investment in secondary market. To curb speculative risk, boards of banks and financial institutions will be required to set investment policies with a minimum holding period of at least 45 days for their investments in the secondary securities market — a provision NRB will arrange to implement as soon as possible.
Implementation Timeline
Nearly all measures carry firm deadlines spread across the Nepali fiscal calendar — from immediate action, through end-Ashoj (mid-October 2026), end-Kartik (mid-November 2026), end-Mangsir (mid-December 2026), end-Poush (mid-January 2027), end-Magh (mid-February 2027) and end-Falgun 2083 (mid-March 2027) — placing the bulk of the reform agenda on SEBON, NEPSE, Nepal Rastra Bank, and the Ministry of Finance itself.
Why It Matters
The action plan signals the government’s intent to address structural weaknesses in Nepal’s capital market — from IPO pricing and broker professionalism to institutional investor participation, product diversification (bonds, ETFs, thematic bonds), tax incentives for long-term investors, and prudential safeguards on bank exposure to equities. Coming in the aftermath of the Bhotekoshi flood disaster, the plan is framed as part of a broader effort to cushion the economy from compounding shocks and to restore momentum in a market that had been under sustained pressure.
