If you've been investing in NEPSE for a while, you probably know the old capital gains tax rates by heart: 5% for long-term holdings, 7.5% for short-term. That's changing. Nepal's budget for fiscal year 2026/27, presented on May 29, 2026, raised both rates and made a major structural change to how the tax works. Here's exactly what's new, and when it takes effect.
What Changed in the FY 2026/27 Budget?
Presenting the budget on May 29, 2026, Finance Minister Dr. Swarnim Wagle announced two major changes to capital gains tax (CGT) on listed shares:
- Long-term rate (shares held more than 365 days): raised from 5% to 7.5%.
- Short-term rate (shares held 365 days or less): raised from 7.5% to 10%.
- CGT on listed securities is now treated as a final withholding tax — meaning individual investors no longer need to report these gains separately in their personal income tax returns or worry about additional liability based on their income bracket.
When Do the New Rates Take Effect?
This is important: the new rates apply from the start of fiscal year 2026/27, which begins around mid-July 2026 (Shrawan 1, 2083 in the Nepali calendar). If you're reading this before that date, sales completed in the current fiscal year (2025/26) are still taxed at the old rates — 5% long-term and 7.5% short-term. Always confirm the exact cutover date with your broker or IRD notices closer to the transition.
How Is CGT Calculated?
Capital gains tax is deducted at source by the broker at the time of sale, and it applies only to your net profit — not the total sale value. The formula is straightforward:
Capital Gain = Sale Price − WACC (purchase cost, including broker commission)
Capital Gains Tax = Capital Gain × Applicable Rate
For example, if you bought shares at a WACC of NPR 500 and sold them at NPR 800 after holding for 8 months (short-term), your gain per share is NPR 300, taxed at the short-term rate applicable at the time of sale.
What If You Sell at a Loss?
If you sell shares for less than your WACC, no capital gains tax applies to that transaction. However, Nepal's CGT system works on a per-transaction basis, not a portfolio basis — meaning a loss on one sale generally cannot be offset against a gain on another sale within the same fiscal year. This is a point of ongoing criticism from market analysts, who argue the system should tax net annual portfolio performance instead.
Why Were Rates Increased Despite a Weak Market?
Interestingly, this rate hike comes at a time when CGT collections have actually been falling — dropping to roughly NPR 9.54 billion between mid-July 2025 and mid-June 2026, compared to NPR 15.27 billion in the same period the previous year, due to a volatile secondary market. The government appears to be aiming to offset softer trading volumes with higher rates per transaction, while using the "final tax" simplification to make the overall system more predictable for investors.
How This Affects Your Investment Strategy
- Holding longer still helps: Even under the new rates, long-term holding (7.5%) remains cheaper than short-term trading (10%) — the incentive to hold beyond 365 days hasn't disappeared.
- Simpler tax filing: Since CGT is now final, you won't need to worry about your share profits pushing you into a higher personal income tax bracket.
- Plan sale timing carefully: If you're close to the FY transition and also close to the 365-day mark, timing your sale could meaningfully affect your tax rate.
Frequently Asked Questions (FAQ)
Do I need to file a separate tax return for share profits now?
No. Since CGT on listed shares is now a final withholding tax, it's deducted at the point of sale and does not need to be reported separately in your personal income tax filing.
Does the new rate apply to shares I already hold?
The rate that applies is determined by when you actually sell the shares, not when you bought them — so shares sold after the FY 2026/27 cutover will be taxed at the new rates regardless of purchase date.
Are these rates the same for IPO shares and secondary market shares?
Yes, the long-term/short-term CGT structure applies uniformly to listed shares regardless of whether they were acquired through an IPO or purchased in the secondary market.
Conclusion
Nepal's capital gains tax on shares is getting both simpler and more expensive at the same time — a final tax structure that removes filing headaches, paired with higher rates of 7.5% and 10%. If you're planning a sale around the fiscal year transition in mid-July 2026, it's worth checking with your broker on the exact cutover date to know which rate applies to your transaction.
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