Fiscal Nepal
First Business News Portal in English from Nepal
swarnim wagle RSP convention Chitwan
KATHMANDU: New capital gains tax rates on share and real estate transactions will come into effect from Friday, following changes introduced by the government through the budget for the upcoming fiscal year.
Under the revised provisions, investors selling shares will now pay 10 percent capital gains tax on short-term holdings and 7.5 percent on long-term holdings, marking an increase of 2.5 percentage points in both categories.
The government announced the tax hike through the annual budget, stating that the capital gains tax on share transactions would be treated as a final tax. However, the provision sparked debate after the Economic Act 2083 did not explicitly state that the capital gains tax on securities transactions would be considered final.
While presenting the budget, Finance Minister Dr. Swarnim Wagle said the tax deducted on share trading would be treated as the final tax liability. Nevertheless, the Economic Act does not clearly include such a provision, creating uncertainty among investors and tax experts.
The revised rates have been introduced by amending the Income Tax Act. Under the new structure, gains from shares held for up to one year will be taxed at 10 percent, while shares held for more than one year will attract a 7.5 percent capital gains tax.
Previously, the tax rates stood at 7.5 percent for short-term investments and 5 percent for long-term holdings.
The government has also increased capital gains tax on real estate transactions.
Individuals selling property that has been owned for five years or more will now be required to pay 7.5 percent capital gains tax, up from the previous 5 percent.
Likewise, property sold after being held for less than five years will now be subject to a 10 percent capital gains tax, compared to the earlier 7.5 percent rate.
The revised tax rates are part of the government’s broader revenue mobilization strategy for the new fiscal year and will be applicable to all eligible share and real estate transactions carried out from Friday onward.
The changes are expected to have a direct impact on stock market investors and property sellers, as transaction costs increase under the revised tax regime. Market participants have been closely monitoring the implementation, particularly amid concerns over the legal ambiguity regarding the “final tax” status of capital gains tax on securities transactions.
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