Government Increases Capital Gains Tax on Stock Market Earnings

The government has increased the capital gains tax on share trading profits based on the holding period of stocks through the budget for the fiscal year 2083/84.

Investors who sell shares within one year of purchase will now be required to pay a 10 percent capital gains tax, up from the existing 7.5 percent. Similarly, investors holding shares for more than one year will have to pay 7.5 percent tax, compared to the previous 5 percent rate.

Finance Minister Dr. Swarnim Wagle announced the revised tax rates while presenting the new budget on Thursday. Despite the increase, the government has declared the revised capital gains tax as the final applicable rate, a move that market analysts say could help boost investor confidence. Previously, uncertainty over potential future tax hikes had created concerns among investors.

President of the Stock Brokers Association of Nepal, Sagar Dhakal, said the market had been urging the government to fix the tax structure permanently even if rates were increased. He noted that the government’s decision to make the revised rates final is likely to have a positive impact on the stock market.