Investors Will No Longer Face Additional Tax Liability After Paying Capital Gains Tax
Kathmandu — The Government of Nepal has announced a major relief for stock market investors by declaring capital gains tax on the sale of shares of listed companies as a final tax.
Finance Minister Dr. Swarnim Waglé made the announcement while presenting the national budget for fiscal year 2083/84 during a joint session of the Federal Parliament on Friday.
During his budget speech, the Finance Minister stated that income earned from the trading of listed securities will no longer be subject to additional taxation once the applicable capital gains tax has been paid.
What the New Provision Means for Investors
Under the newly announced provision, investors who earn profits from buying and selling shares will not be required to include those gains in their taxable income for further tax calculations.
In simple terms, once capital gains tax is deducted and paid, the tax obligation on that income will be considered fully settled.
The move is expected to simplify tax compliance for investors and provide greater certainty to participants in Nepal’s stock market.
Long-Standing Demand of the Capital Market
The decision comes after repeated requests from stock market stakeholders and investor representatives.
Just 15 days before the budget announcement, representatives from Nepal’s capital market had met Finance Minister Dr. Swarnim Waglé and urged the government to classify capital gains tax as a final tax.
According to market participants, the Finance Minister had assured them that the issue would be addressed in the upcoming budget, a commitment that has now been fulfilled.
Previous Capital Gains Tax Structure
Under the previous taxation system, investors were required to pay capital gains tax based on the duration for which shares were held:
- 7.5% capital gains tax for shares held for less than one year
- 5% capital gains tax for shares held for more than one year
While these tax rates remain applicable, the key change is that the tax paid will now be treated as final, eliminating the possibility of additional tax assessments on the same income.
Positive Development for Nepal’s Stock Market
Market experts believe the provision could improve investor confidence, encourage greater participation in the Nepal Stock Exchange (NEPSE), and make the tax system more investor-friendly.
The measure is also expected to reduce confusion regarding taxation of investment income and align Nepal’s capital market practices with those followed in many international markets.
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