July 19: The government collected more than Rs 2.97 billion in capital gains tax (CGT) from the securities market in the fiscal year 2022/23.  The government collected Rs 998.5 million from long-term individual investors and more than Rs 1.64 billion from short-term investors. Similarly, from institutional investors, the government collected capital gains tax of more than Rs 331.2 million.

This capital gains tax collection is 71 percent less compared to the previous year (FY 2021/22), which was more than Rs 10.35 billion.

In FY 2021/22, the government collected more than Rs 2.36 billion from long-term investors; more than Rs 6.49 billion from short-term investors, and more than Rs 1.26 billion from institutional investors. Compared to the previous year, the government's income in terms of amount has decreased by Rs 7.38 billion in the last fiscal year.

Suresh Neupane, information officer of CDS and Clearing Limited (CDSC) said that out of the total capital gains tax for the year 2021/22, more than Rs 22.59 million was collected from individual short-term and long-term investors. He said that since the year 2021/22 was a record year for Nepal's securities market, the collection of capital gains tax was high. On August 18, 2021, the NEPSE index, which measures the overall securities market of Nepal, reached over 3,000 points.

Neupane estimated that there has been a decrease in the income of the government since the investors did not show the same enthusiasm as in the previous year. Neupane says that along with the decrease in property value of investors, there has also been a decrease in the tax collected from investors by the government in the last fiscal year.

The securities market is one of the areas where the government collects a lot of taxes. Even when other economic activities in the country were closed due to the Covid-19 pandemic, the government collected billions of rupees monthly in taxes from the securities market.

The government levies a capital gains tax of up to 10 percent on the profits earned by investors in the securities market. The government collects capital gains tax of 10 percent from institutional investors and a maximum of 7.5 percent from individual investors. Individual investors have to pay two types of capital gains tax.

Investors holding shares for more than one year are considered as long-term investors and short-term investors are those who hold shares for less than one year. Investors of securities have to pay capital gains tax on the basis of weighted average cost.