After furious stock investors resorted to protest against the provision in the budget for the next fiscal year that has kept the stock transactions above Rs 5 million in the income tax slab, the government has said that the existing arrangement related to capital gains tax (CGT) is the final tax on the income from share trading. The Finance Ministry relented to the demand of agitating share investors on Sunday after the latter threatened to close the Nepse Trade Management System (TMS). Currently, the government levies a five percent CGT on income from long-term trading of shares (shares that are sold after a year of purchase) and 7.5 percent CGT on short-term trading (shares that are sold in less than a year of purchase). The Finance Ministry invited the associations of share investors for talks on Sunday where the government agreed to continue the existing tax arrangement on share trading. During the talks, Finance Minister Dr. Prakash Sharan Mahat himself assured that the current 5 percent and 7.5 percent provision of CGT will be taken as the final tax.

Minister Mahat urged the investors to avoid panic and said that no additional taxes will be levied on profits earned from share trading.

The government in the new Financial Bill has incorporated the earnings of the share investors under the income tax bracket apart from the existing capital gains tax. As per the new provision, if a Nepali citizen declares income from share or real estate trading from FY 2019/20 to 2021/22, until mid-April, 2024, the 50 percent tax levied in accordance with Income Tax Act, 2058 will be waived. After the government declared imposing income tax for the earnings of shares transactions, the stock market reacted negatively, losing 92 points last Tuesday and Wednesday. The Inland Revenue Department (IRD) issued statements twice last week but that failed to pacify the stock investors. According to the government's new policy, the person concerned had to pay additional tax on the income after tax as per the income tax limit. If that is implemented, the investor would have to pay up to 39 percent tax according to the income limit. Tilak Koirala, one of the stock investors who led the agitation said that the government has backed away from the decision to impose additional tax on share trading. "Now, CGT will be the final tax on share trading," he said. As per the agreement reached on Sunday at the Finance Ministry, section 29 of the Financial Bill, 2080 will now be deactivated through the parliamentary process. As the government has proposed an additional tax on share trading, it must be passed by the Parliament before it is implemented. According to Koirala, there has been an agreement with the finance minister that section 29 would be deactivated. While Sunday's talk has thwarted possible face-offs between the government and investors, capital market experts said the government needs to bring a clear policy on taxes and other issues. Niraj Giri, former Executive Director of the Securities Board of Nepal, said that the government needs to bring a clear policy on taxes and other issues. "Questions have been raised with the government introducing new arrangements in the Financial Bill and backtracking from implementing it. So, the government should bring a clear policy regarding the capital market because it is susceptible to even small policy changes," he said. Nepse post 53 points gain on Sunday After the agreement between the government and stock investors, Nepal Stock Exchange (Nepse) surged by 53.03 points on Sunday. On Sunday, the Nepse index opened at 1,866.35 points and then went to an intraday low of 1,865.73 points before reaching an intraday high of 1,925.11 points and ultimately closed at 1,919.37 points. All the sub-indices at Nepse turned green on Sunday with the hotel sub-index recording the highest gain. The daily turnover of Nepse reached Rs 1.65 billion on Sunday. The share prices of 217 companies increased on Sunday while three companies decreased.