4.5 billion revenue was raised within a month after the stock market increased

Last July alone, investors have paid about 4.235 billion rupees in capital gains tax. During the same period, 315.2 million rupees have been collected for advance tax collection. CDS & Clearing said that a total of 4.55 billion rupees was collected from the stock market last July through capital gains tax and advance tax reduction.

Capital gains tax (CGT) is the amount payable to the government by investors (individuals and institutions) dealing in stock market for the gains made in share trading. Even if the share price rises in the stock market, it will remain at book value unless the investor preserves the profit. But after selling the shares, the investor is taxed in case of profit. That is capital gains tax.

Similarly, a stockbroker has to pay 15 per cent advance tax deduction (TDS) on the fees received for buying and selling shares. By adding these two taxes, it has been analyzed that the government received only 4.5 billion in taxes from the stock market last July.

According to the current law, in case of profit in share trading, the investor has to pay 5% to 10% profit tax. Mutual funds do not have to pay tax. According to which, individual investors who sell shares in more than one year (365 days) must pay 5 percent of the profit and those who sell in less than one year must pay 7 and a half percent of the profit. But institutional investors have to pay 10 percent profit tax. In total share transactions, most of the share is owned by individual investors, while the number of institutional investors is small.

According to CDS and Clearing, the government received 408 million rupees from capital gains tax in July of the financial year 080/82, 426 million rupees in the financial year 079/80 and 3 billion 24 million rupees in the financial year 078/79. There is data that 5 crores 22 lakhs were collected from advance taxation in July of the financial year 080/82, 6 crores 29 lakhs in the financial year 079/80 and 22 crores 97 lakhs in the financial year 078/79.

Since the stock market was falling in the last two years, the turnover was also low and the investors suffered losses. Therefore, the revenue going to the government from this sector also decreased. But since the beginning of this year, the market has been rising at a high speed and the transaction amount is also increasing significantly. According to the Nepal Stock Exchange (NEPSE), the amount received by the government from taxes has also increased due to this reason.

As of last Friday, 63 lakh 73 thousand investors have opened demat accounts for buying and selling shares. This is about 22 percent of the total population of Nepal. Till last July, 38 lakh 51 thousand 294 investors have opened accounts for share trading in the secondary market. Among them, 23 lakh 31 thousand 350 people are buying and selling shares themselves through online. According to NEPSE, 15 lakh 19 thousand 944 people are still buying and selling shares through brokers (off line). Among the total investors of the secondary market, 3842 thousand 540 are individual investors and the remaining 8754 are institutional investors.

Although there were signs of growth in the stock market from the last week of May, the NEPSE growth picked up speed only after the Nepali Congress and UML coalition government was confirmed. A cooperation agreement was signed between these two parties last June 17. On that day, NEPSE index was around 2 thousand 53 points. Since then, NEPSE has increased by more than 900 points. As of last Thursday, the NEPSE index has closed at 2,974 points and the transaction amount is also increasing significantly.

'The loose monetary policy of this financial year has helped the market, which has reached the path of growth, to increase its speed,' said a stock broker, 'Positive finance minister towards the market, loose monetary policy, low interest rate, more liquidity are the main reasons for the rise in the stock market. '

Although the stock market has been increasing in recent months, the regulatory body Nepal Securities Board has been without a chairman since December 20. Without the chairman, on the one hand, there has been no effective regulation of the stock market, and on the other hand, there has been an increase in activity on this occasion. For this reason, the share price of companies whose financial conditions are not good in the market has also increased rapidly. Experts suggest that the regulatory body board, government etc. should pay attention to this.