KATMANDU, July 3: Government tax collection on the stock market has increased several-fold in the first 11 months of the current fiscal year, along with an increase in the amount of secondary market transactions during the period .
According to the Nepal Stock Exchange (Nepse), the government collected tax revenue worth Rs 13.33 billion in mid-July 2020 and mid-June 2021, a record amount of Nepse over the past three decades of its creation. The amount is more than double the amount collected in the past five years on the stock market. In fiscal years 2015/16 and 2019/20, the secondary market contributed Rs 6.59 billion to tax revenue.
The notable increase in government tax collection is due to an increase in the volume of transactions during the reporting period, when the daily amount of transactions reached a record high of around Rs 20 billion and the index Nepse also crossed 3,000 points. The government collects capital gains tax, dividend tax, income tax and withholding tax on the stock market.
Among these, the government derives good revenues from the secondary market capital gains tax. By law, an institutional investor pays 10% capital gains tax. For individual investors, a 7.5% tax is applicable if a company’s stock is sold within one year of purchase, while the capital gains tax rate is 5% if the stock is sold after one year of purchase.