Govt rolls back decision to hike CGT thresholdThe government on Wednesday rolled back its decision to revise the capital gains tax threshold on the sale of bonus and rights shares following the protests from stock investors.
The government on Wednesday rolled back its decision to revise the capital gains tax threshold on the sale of bonus and rights shares following the protests from stock investors.
The Finance Ministry has sent a letter to the Inland Revenue Department (IRD) to impose tax as per the previous provision for now. Following the decesion, Nepal Stock Exchange (Nepse) index jumped 13.91 points to close at 1,282.75 points on Wednesday. The daily transaction started at 1:18pm.
Investors launched a protest after the Inland Revenue Department (IRD) last Friday wrote to the Securities Board of Nepal, Nepse and CDS and Clearing instructing them to revise the capital gains tax threshold on bonus and rights shares.
The IRD had asked them to charge capital gains tax as per the Income Tax Act 2002.
The stock investors, on Tuesday, boycotted trading on the Nepse for the whole day after holding a 30-minute boycott on Monday.
It was the second boycott of trading on Nepse in two years. In 2016, investors boycotted trading for a day after the Securities Board of Nepal revised their rate of commission.
Uttar Kumar Khatri, joint secretary at the Financial Sector Management Division of the Finance Ministry, said that the governemtn has rolled back the decesion until this fiscal year, ending mid-july.
The Finance Ministry on Tuesday formed a taskforce to study the new system of imposing capital gains tax on right shares and bonus shares based on the market value and floor price of Rs100 per unit.
The seven-member taskforce led by Khatri includes representatives from the IRD, Department of Revenue Investigation, Securities Board of Nepal, Nepse and CDS and Clearing, and a capital market expert as members. The panel has been given 15 days to submit a report. “Based on the study report, the ministry will plan the next move from the upcoming fiscal year,” said Khatri.
Earlier on Tuesday, Rajan Lamsal, general secretary of the Nepal Investors Forum, had said they only concern was that tax authorities should not overburden investors if they have incurred a loss. Also, the capital gains tax should be considered as the final tax and not income tax in advance.
Stock investors were of the view that the tax refund policy would not help small investors and those who conduct transactions irregularly.