Kathmandu, September 16: The government has cut the advance capital gains tax on profits from the sale of shares, providing relief to individual investors.
A Cabinet meeting on Wednesday decided to reduce the tax on profits from shares of companies listed on the Nepal Stock Exchange. Under the new provision, a 3.5 percent advance tax will apply to profits from shares held for more than 365 days, while a 5 percent tax will apply to shares held for 365 days or less.
Previously, the rates were 7.5 percent and 10 percent respectively under the current fiscal year’s budget.
The reduction is in line with the government’s 21-point Capital Market Strengthening and Revival Action Plan, unveiled by Finance Minister Swarnim Wagle earlier this week. The plan had proposed a 3.75 percent tax on long-term holdings, but the Cabinet reduced it further to 3.5 percent.
The government says the lower tax rates will reduce transaction costs and encourage investment in the capital market. The action plan also proposes a system under which profits and losses from share transactions would be adjusted, with tax imposed only on net gains.
The new tax rates will come into effect after the necessary legal procedures are completed.
Other Cabinet Decisions
The Cabinet also approved regulations aimed at simplifying and digitizing government decision-making, approved the Cyclical Relief Fund Operating Procedure 2083, and promoted three Nepal Judicial Service officials to the gazetted special class.
It also decided to appoint a Saudi lawyer through a power of attorney to pursue insurance and compensation claims for Nepali citizens killed or injured in Saudi Arabia.
Nepal Administration Service Joint Secretary Kaliprasad Parajuli was also promoted to the post of Secretary.
