SEBON and IRD doing homework to implement compulsory PAN system in Nepali Capital market; Prime goal - TRANSPARENCY

The Securities Board of Nepal (SEBON) has recently been working on implementing the Compulsory PAN system in the Nepali Capital Market.

PAN - Permanent Account Number, is a code that acts as an identifier for individuals and companies alike. The PAN helps in tracking the source of money, which eventually promotes transparency in the market.

Upon conversation with the spokesperson of SEBON, he informed that SEBON is currently under discussion with the Internal revenue department (IRD) to work out the implementation challenges and the procedural framework for this system. Once the system is implemented, investors will now require a PAN number to buy or sell in the capital market.

Mr. Niraj Giri says, "The main goal of this system is to promote transparency in the system. In addition, when this system is implemented the investors will be able to claim the losses associated with the Capital Gain Tax (CGT). The third benefit is, when investors have a PAN and are transacting it they'll feel secure."

The liquidity shortage in the market has surely shown its effect in the capital market when the bear hasn't left sight yet. When the investors are not actively seeking to use the online trading system, this might affect some investors who feel it tiresome to open a PAN account. To this Mr. Giri replies, "I think it will not impact the market in that manner because the account opening is just a one-time job and it'll stay for the rest of your life."

It will indeed take some time and habit but if we see in the long run, this does have numerous benefits. In Nepal, a lot of economic activities are informal and this will bring some portion of the informal economy onto the surface. Similarly, through PAN we'll be able to track our transactions and in case of any mistake, we'll have a valid proof that will help us prove our case.

SEBON has also directed the NEPSE to do the necessary homework on the said topic. So regarding the same, NEPSE has called the representatives of various Investors' Associations to brief about what the system and how it's going to affect everyone.

Upon asking how the discussion with IRD is going, Mr. Giri informed, "We are still discussing, so we can't say anything definitive. But the IRD seems positive till now. Also, this was proposed in the Budget of this year itself, so we are expecting good feedback."