The government has cut the capital gains tax on individual share trading to 3.75 percent on holdings over one year and 5 percent on shorter-term reversing a hike it introduced just months ago after Nepal's stock market fell nearly 400 points.
The Ministry of Finance announced the reversal on September 15 as part of a 21-point "Capital Market Strengthening and Revitalization Action Plan," approved by Cabinet on September 16.
The new rates replace the 7.5 percent/10 percent set in this year's budget and are lower than the 5 percent/7.5 percent that applied even before that budget.
The plan also lets investors offset losses against gains, shortens banks' mandatory holding period in the secondary market from six months to 45 days, and sets up reforms to IPOs, the bond market and mutual funds.
NEPSE responded immediately: the index rose 48.57 points (1.87 percent) to 2,633.62 on the news, with turnover hitting a two-month high of over Rs 8.29 billion. CGT collections had fallen more than a third this fiscal year amid the slump, from Rs 15.27 billion to Rs 9.54 billion.
