Government revenue from capital gains tax (CGT) on share transactions has dropped sharply in the first five months of the current fiscal year, reflecting a slowdown in stock market activity.
Data from CDS and Clearing Limited show that CGT collection between mid-July and mid-December declined by 56.39 percent compared to the same period last year. During the review period, the government collected Rs. 4.01 billion, down from Rs. 9.20 billion, resulting in a revenue shortfall of Rs. 5.19 billion. Despite nearly half of the fiscal year having passed, the amount collected so far accounts for only a small portion of last year’s total CGT revenue of Rs. 16.54 billion.
Market participants cite weak trading volumes and fading investor confidence as key reasons behind the decline. Temporary disruptions in trading, continued stress in banks and financial institutions, rising liabilities in the insurance sector, and market uncertainty have collectively reduced turnover. The Nepal Stock Exchange index also slipped below the 2,600-point level from above 3,000 points during the period, further limiting tax inflows from share trading.
