The recommendation to levy hefty 39 percent of tax on the income generated through the trading of shares has significantly impacted the share markets today.
The high-level recommendation committee on tax system reform led by Bidyadhar Mallik recommended to the government that the capital gains tax levied on profits made through share trading should be increased by 10 percent and personal income tax by 39 percent.
Its impact was witnessed in today’s share market after the committee recommended for a hike in personal income tax at a time when the investors had been advocating for a reduction in it.
Nepal Stock Exchange (Nepse) witnessed a transaction of Rs 4.05 billion after the bench mark index plummeted to 18.76 points, resulting in fall in the share price of 108 out of 318 companies today.
The investors were hopeful that the market which was showing green signals after almost five months would increase the market volume.
According to the existing provision, five percent of capital gains tax is levied on profits made through shares traded after holding more than one year and 7.5 percent capital gains tax on profits sold in less than one year.
The committee has recommended 7.5 percent capital gains tax on the income generated through the trading of shares sold after holding more than one year and 10 percent of capital gains tax if sold in less than one year.
The investors had been demanding that the ceiling of this kind of tax should not exceed more than five percent.
The committee’s recommendation for a hike in capital gains tax has sent a chill down the spine of investors, experts have said.
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