The investment community in Nepal eagerly awaits the presentation of the national budget for the fiscal year 2081/82 by the Honorable Finance Minister on Jestha 15, 2081. Investors are hopeful that the new budget will include provisions to support and boost the capital market sector.
Currently, the Securities Board of Nepal mandates a withholding tax on capital gains from securities listed on the Nepal Stock Exchange. Investors holding shares for more than 365 days are subject to a 5% tax on capital gains, while those holding shares for 365 days or less are subject to a 7.5% tax.
Investor associations are advocating for key amendments to these tax regulations. They propose that the withholding tax be converted into a final tax and that the Income Tax Act’s schedules be revised accordingly. Specifically, they are calling for the short-term capital gains tax (for shares held for 365 days or less) to be reduced to 5% and the long-term capital gains tax (for shares held for more than 365 days) to be reduced to 3%.
These amendments aim to encourage individual participation in share trading and simplify tax collection and record-keeping processes. The investor community believes that such changes will boost investor confidence, increase trading volumes, and ultimately enhance government revenue through higher tax collections.