Data from CDS and Clearing Limited (CDSC) reveals that the government collected just Rs 1.25 billion in profit tax through Shrawan and Bhadra, a sharp decline from the Rs 2.75 billion recorded during the same period last year.
The revenue shortfall comes on the heels of the recent budget, which had hiked capital gains tax rates by 2.5 percentage points—setting short-term investor tax (holding 365 days or less) at 10 percent and long-term investor tax at 7.5 percent. However, rather than boosting state coffers, the higher tax burden severely dented investor morale, caused daily turnovers to plummet, and drove the market index down to around 2,647 points.
Recognizing the counterproductive impact of the tax hike, the Ministry of Finance introduced the Capital Market Strengthening and Revival Action Plan, 2083 BS. Acting on this proposal, a Cabinet meeting held on September 14 officially decided to slash the rates:
Despite the Cabinet's policy decision, the revised tax provisions have yet to be published in the Nepal Gazette. Market participants remain caught in a brief holding pattern as they await official publication and the subsequent system updates by the Inland Revenue Department and CDSC.
Financial analysts expect that once legally implemented, the reduced tax rates will restore investor confidence, reinvigorate market liquidity, and ultimately help revive government revenue collection in the months ahead.
