August 25: The capital gains tax (CGT) collected from investors in the securities market has decreased by more than Rs 248.1 million in the month of Shrawn (mid-July to mid-August) compared to the month of Asar (mid-June to mid-July) this year. According to the information provided by CDS and Clearing Limited (CDSC), the clearing house of securities transactions, the government collected capital gains tax of Rs 400.89 million in mid-August against Rs 649.49 million in mid-July.
Suresh Neupane, information officer of CDSC, said that the government collected CGT of more than Rs 74.5 million from institutional investors in mid-July to mid-August. According to Neupane, the government had collected CGT of more than Rs 134.7 million from institutional investors a month ago.
Institutional investors are required to pay 10 percent capital gains tax to the government when trading securities at a profit.
Meanwhile, the government collects two types of capital gains tax from individual investors.
CDSC spokesperson Neupane said that the government collected CGT of more than Rs 224.7 million from short term investments and more than Rs 101.5 million from long term investments made by individual investors in mid-July to mid-August.
He said that a month ago, more than Rs 359.5 million were collected from short-term investors and more than Rs 154.6 million from long-term investors.
In the secondary market of securities, the number of individual investors is more than institutional investors.
Information officer of Nepal Stock Exchange (NEPSE) Murahari Parajuli said that more than 1.8 million investors have traded in the secondary market of securities. According to Parajuli, more than 100,000 investors are active in the business every day when the market is increasing, while 60,000 to 65,000 are active on the day when the market is decreasing.
Lately, there is not much enthusiasm in the secondary market. Due to the increase in the trend of booking profits in a short period of time, the market has not been able to gain positive momentum.
Brokers say that as the market could not pick up pace, the investors were in a state of confusion and the transaction amount also decreased along with the market capitalization in the last one month.
When the capital gains tax paid by the investors who have made profit is reduced, it indicates that the income of the investors from the securities market has also reduced.
Leading investor Dambaru Ballabh Ghimire says that when the income of investors in the securities market increases, the income of the government will also increase. He says that investors like him, who have made this sector a source of income, are in trouble because the market is not gaining positive momentum. Ghimire, who has been active in the stock market for the past four decades, says that long-term investors should not be disappointed.
Admitting that the market has a natural cycle of growth and decline, Ghimire emphasized on the development of the market so that the income of the investors does not decrease.
The government also seems to have a special interest in the development of this sector. Recently, the government has tried to diversify the market by approving the seventh amendment proposal of the Securities Registration and Issuance Regulations in order to develop the securities market.
Even the Securities Board of Nepal, the regulatory body of the securities market, is emphasizing on policy reforms keeping in mind the interests of the investors.
