The government collected a record Rs 16.54bn in capital gains tax (CGT) from share transactions in the last fiscal year 2024/25. According to CDS and Clearing Ltd, the highest CGT (Rs 4.23bn) was collected in July, the first month of the fiscal year, while the lowest was in December when Rs 580.7m was collected.

The secondary market, which had been subdued for months, started recovering from June last which explains the highest CGT collection in the first month of 2024/25. This was largely due to a more flexible monetary policy introduced by Nepal Rastra Bank, which boosted investor sentiment. After falling to around 1,800 points in 2023/24, the Nepal Stock Exchange (Nepse) index climbed to 3,000 in the first month of 2024/25. 

However, the benchmark index fell and hovered around 2,600-point level in the remaining months. The index has been rising again since the start of the current fiscal year, breaching the 2,900-point support level.

Investors holding shares for a year or less are subject to a 7.5 percent capital gains tax, while those who hold shares for more than a year are required to pay five percent on profits. Higher trading volume means higher CGT collection for the government, whereas low activity during slumps brings in less.

Month wise breakdown shows, Rs 4.24bn was collected in July, Rs 2.58bn in August, Rs 586.5m in September,  Rs 758.7m in October and Rs 1.04bn in November. Likewise, Rs 580.7m was collected in December, Rs 1.05bn in January, Rs 1.33bn in February, Rs 693.5m in March), Rs 1.22bn in April, Rs 1.17bn in May and Rs 1.27bn in June.