March 20: In a one month period between mid-February to mid-March, the government collected less than half of the capital gains tax from investors in the secondary market compared to a month ago (mid-January to mid-February). In mid-February to mid-March, the government has collected more than Rs 171.5 million under the heading of capital gains tax. The government collected this tax from investors who traded securities at a profit in the review month.

Secondary market investors have to pay a maximum of 10 percent capital gains tax to the government when they sell securities at a profit. Institutional investors have to pay 10 percent and individual investors have to pay 7.5 percent for short-term transactions and 5 percent for long-term capital gains tax.

The income of both the investors and the government has decreased due to the decrease in securities trading in the secondary market.

In mid-January to mid-February, the government collected more than Rs 346.4 million capital gains tax from the secondary market.

The data of NEPSE shows that the total market capitalization of the secondary market decreased by Rs 238.28 billion in mid-February to mid-March. The total market capitalization which was Rs 3061.96 billion in mid-January fell to Rs 2823.67 billion in mid-February.

CDS & Clearing Limited’s spokesperson Suresh Neupane said that the government collected more capital gains tax from long-term investors in the review month. Neupane added that more tax was collected from short-term investors in the last few months, but more tax was collected from long-term investors in mid-February to mid-March.

According to him, the contribution of long-term investors is more than Rs 90.13 million out of the total CGT of Rs 171.5 million collected in the review month.

Neupane said that more than Rs 82 million was collected from short-term investors.

In recent weeks, the general investors have become worried due to the continuous fall in the share market. They have urged market regulators to work for market reforms. Investors argue that when the securities market increases, the income of the government will increase along with the investors’ participation.

Investors have emphasized that the government should pay special attention to improve the current situation of the securities market, which is considered as a mirror of the economy.