FAQ
Circuit breaker in Nepse
NEPSE has implemented index-based circuit breakers with effect from 2064/6/4 (21 September 2007). Index-based Circuit Breakers or market halt system applies at 3 stages of the Nepse index movement on either way by 3%, 4% and 5%. These circuit breakers when triggered bring about a trading halt in all equities.
• In case of 3% movement either way, there would be a market halt for 15 minutes if the movement takes place during first hour of trading i.e. 13:00 hours. In case this movement takes after 13:00 hours there will be no trading halt at this level and market shall continue trading.
• In case of 4% movement either way, there would be a market halt for half an hour if the movement takes place before 14:00 hours. In case this movement takes after 14:00 hours there will be no trading halt at this level and market shall continue trading.
• In case of 5% movement in either way, trading shall be halted for the remainder of the day.
Individual securities Price Range
Price Range is applicable on individual securities. The trading of the individual securities are not halted but allowed to trade within the price range.
The price band is 10 percent of previous close on either way. During the ATO (At the opening) session the range is 5 percent on either way of previous close price. After the band is 2 percent on either way of the last traded price till it reaches to 10 percent of the previous close.
Total charge on Buying and Selling Securities
A. Charges on Buying Securities
When an investor is engaged in buying activities, every time s/he needs to pay following types of charges per buying transaction:
- Brokerage Commission (ranges from 0.7% to 1% of per transaction amount)
- Fee to SEBON (fixed 0.015% of transaction amount)
- Name transfer charge worth Rs 5 per transaction
B. Charges on Selling Securities
When an investor is engaged in selling activities, every time s/he needs to pay following types of charges:
- Brokerage Commission (ranges from 0.7% to 1% of per transaction amount)
- Fee to SEBON (fixed 0.015% of transaction amount)
- Capital Gain Tax (fixed 5% on Net Profit for individual and 10% for Institutional Investors, this tax is levied only if seller makes profit from security transaction)
Net Profit = Selling Price - Buying Price - Commissions to brokers - Charges of SEBON
Tax System
1. For Cash Dividend
The shareholders are charged 5% tax for the cash dividend paid by the companies.
For e.g., if a shareholder receives Rs 1,000 as Cash Dividend then s/he is oblige to pay 5% of Rs 1,000 i.e., Rs 50 as a tax for Cash Dividend.
2. For Bonus Share
Similarly, for the Stock Dividend or Bonus Share also the shareholders are charged 5% tax on the par value of Bonus Share distributed by the companies.
For e.g. if a shareholder receives 10 bonus shares from a company, then the face value of Bonus Share will be 10*100 (assuming Rs 100 as its par value)= Rs 1,000 and the Bonus share Tax will be 5% of 1,000 i.e. Rs 50.
3. For Capital Gain
As per the prevailing tax rule of the country, following is the tax levied on the individual and institutional investors:
- Capital Gain Tax for Individual: 5% of Net Profit
- Capital Gain Tax for Institutional Investors: 10% of Net Profit
If an investor obtains profit through selling a share then s/he will be obligated to pay the 5% tax on the profit amount less the broker and SEBON commission, to the Government of Nepal as capital gain tax.
