The proposal became controversial after opposition from all sides, saying that the one percent fee initially discouraged investors from investing, which should have been encouraged.
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The proposal to impose a 1 percent fee on the transfer of shares worth 2.5 million or more in the proposed Companies Act has become controversial.
The proposal has become controversial after opposition from all sides said that the one percent fee was initially imposed to discourage investors from investing. The Ministry of Industry, Commerce and Supplies had given a one-week deadline for the proposed draft.
According to which, the deadline for submitting suggestions is today (Monday). Kalpana Shrestha, Joint Secretary of the Ministry of Industry, Commerce and Supplies and a member of the draft preparation committee of the Act, said that the draft will be finalized by Monday and sent to the Ministry of Law after incorporating the suggestions collected.
‘The one percent fee proposed in the draft has become very controversial. There have also been suggestions that it should be revised. The draft of the act will be finalized after gathering those suggestions,' said Joint Secretary Shrestha, 'However, it is not yet possible to say whether the proposal to levy one percent fee will be removed or maintained. Since the suggestions have been received, we are also discussing that issue, and if everyone finds it appropriate, it can be amended.'
Shrestha did not say that since the Companies Act is in the process of being amended, all the provisions proposed there are only proposals and suggestions were sought on whether those provisions are appropriate or not. 'The government's objective is to encourage investment. If any state policy discourages investment, it is not good. Therefore, the proposal to levy one percent fee, which is currently being discussed, is also likely to be amended,' said Shrestha.
The draft of the Companies Act, 2083, made public by the Ministry of Industry, Commerce and Supplies, proposes a provision to levy 1 percent fee on the transfer of shares worth 2.5 million rupees or more. In which, a provision was also made that the securities dealer concerned would have to collect the fee and deposit it in the Federal Consolidated Fund for the purchase and sale of shares through the stock exchange system.
There was opposition saying that the system of charging fees in the process of investing in shares would discourage investors. The proposal was strongly opposed on social media, especially among stock market traders. After such widespread opposition, an informal discussion was held between the Ministry of Industry, Commerce and Supplies and the Drafting Committee of the Act to revise the provision, according to sources.
Although the government announced through the budget for the current fiscal year that the capital gains tax on share transactions would be the final tax, the Financial Act does not include a corresponding provision. Experts say that this still leaves uncertainty as to whether the capital gains tax is the final tax or not.
However, the government has increased the profit tax rate from 5 to 7.5 percent and from 7.5 percent to 10 percent through the budget. Currently, when trading shares in the secondary market, investors are required to pay a service fee of 0.24 percent to 0.36 percent to the broker based on the transaction amount.
