If you traded shares on NEPSE this year, the tax bite on your profit just changed — and for the better, it also got simpler. Starting FY 2083/84, capital gains tax (CGT) on listed shares is no longer something you reconcile later on your annual return. Your broker withholds it at the point of sale, and that withholding is now treated as a final tax. This guide walks through exactly how much you owe, how the new rate compares with last year, and what to watch for around bonus shares, IPO allotments, and loss set-offs.
What Capital Gains Tax on Shares Is and Who It Applies To
Capital gains tax on shares is levied on the profit you make when you sell a listed security for more than you paid for it. It applies to any resident natural person trading shares of companies listed with the Securities Board of Nepal (SEBON) through a licensed broker on NEPSE. The tax is calculated on the gain only — sale proceeds minus the original cost of acquisition and any allowable transaction charges such as brokerage and SEBON fees — never on the full sale value. If you sold shares at a loss, no CGT is due on that particular transaction.
Because the broker deducts the tax automatically through the CDSC settlement system at the time of sale, most retail investors never see a separate tax bill. The deduction shows up as a lower net credit in your Meroshare or broker account compared to the raw sale value.
CGT Rate for Short-Term vs Long-Term Holding of Listed Shares
The rate you pay depends entirely on how long you held the shares before selling, counted from the settlement date of purchase to the settlement date of sale:
Short-term (365 days or less): Taxed at 10% of the gain.
Long-term (more than 365 days): Taxed at 7.5% of the gain.
The gap between the two rates is intentional. It rewards investors who hold positions for over a year rather than trading in and out within the same fiscal cycle, nudging retail behaviour toward longer holding periods and away from pure speculation.
What Changed in Budget 2083/84 vs FY 2082/83 Rates
Under FY 2082/83, the rates were lower: 7.5% for short-term holdings and 5% for long-term holdings, and the tax withheld was only provisional — you still had to reconcile it against your personal income tax slab on your annual return, and could owe more or get a refund. Budget 2083/84, presented by Finance Minister Dr. Swarnim Wagle, raised both rates by 2.5 percentage points and, more importantly, declared CGT on listed securities a final tax. Once your broker deducts it, that income is no longer added to your taxable personal income and does not need to appear anywhere else on your return.
For most retail investors this is a net simplification even though the headline rate went up: no more guessing whether your share gains push you into a higher income slab, and no year-end reconciliation for this specific income stream.
How the Broker Withholds CGT at the Point of Sale
When you place a sell order, the CDSC (Central Depository System and Clearing) matches your holding against its own record of your purchase price and date. The system automatically classifies the trade as short-term or long-term, applies the correct rate to the computed gain, and deducts the tax before crediting your broker account. This happens transaction by transaction — if you sell the same scrip in multiple lots bought on different dates, each lot is taxed according to its own individual holding period (commonly using a first-in-first-out approach for identical scrips).
You can verify the exact CGT deducted on any trade through your broker's contract note or your Meroshare portfolio statement, which itemises the gross sale value, tax withheld, and net proceeds credited.
Worked Example — Buying and Selling at Different Holding Periods
Example A (short-term): You buy 100 shares at NPR 500 (cost NPR 50,000) and sell them 5 months later at NPR 620 (proceeds NPR 62,000). Gain = NPR 12,000. Since the holding period is under 365 days, CGT = 10% of NPR 12,000 = NPR 1,200. Net credit to your account: NPR 60,800 (before brokerage).
Example B (long-term): You buy the same 100 shares at NPR 500 and sell them 14 months later at NPR 620. Gain = NPR 12,000. Since the holding exceeds 365 days, CGT = 7.5% of NPR 12,000 = NPR 900. Holding on for an extra couple of months, in this case, saves you NPR 300 in tax.
Set-Off of Losses Against Gains — Is It Allowed in Nepal?
This is one of the most common points of confusion. Because CGT on listed shares is withheld transaction-by-transaction at the point of sale, and is now a final tax, there is no year-end mechanism to net a loss on one scrip against a gain on another within the same fiscal year through the personal income tax return — the two events are already closed out individually at source. A losing trade simply attracts zero CGT; it does not generate a credit you can apply elsewhere. If you are an active trader running many positions, this makes it worth reviewing realised gains and losses regularly rather than assuming a portfolio-level offset will happen automatically at filing time.
Annual Return Disclosure Requirement Even After Broker Withholding
Even though the tax is final and does not add to your taxable income slab, most tax advisors still recommend disclosing the total share transactions and CGT paid in the relevant schedule of your annual return, particularly if you file under Form D-03 for other income sources. This creates a documented paper trail that matches IRD's own data received from CDSC, which can matter if your return is later selected for review. It is not the same as paying additional tax — it is a disclosure, not a fresh liability.
FAQs — CGT on IPO Allotment Shares, Bonus Shares, Right Shares
Q: What is the cost base for shares allotted through an IPO?
The cost base is the issue price you paid at allotment. Gains are calculated from that price, and the holding period starts from the allotment/listing date.
Q: How are bonus shares taxed when sold?
Bonus shares are treated as having a cost base of zero, since you did not pay cash for them. When sold, the entire sale proceeds (not just the appreciation) are treated as the capital gain, so the tax impact is proportionally larger than for purchased shares.
Q: Do right shares get the same treatment as bonus shares?
No. Right shares are shares you pay for at a subscription price, so their cost base is the amount you actually paid, similar to a normal purchase — not zero.
Q: Does the holding period reset when bonus or right shares are issued?
Each tranche (original holding, bonus allotment, right allotment) is tracked with its own allotment date for holding-period purposes, so a single folio can contain lots taxed at different rates when sold.
Note: Rates reflect Budget 2083/84 as presented and reported by ICAN and major Nepali outlets, effective Shrawan 1, 2083. Confirm final figures against the gazetted Finance Act 2083 or your broker/CA before filing, as regulations can be revised until formal enactment.
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