Capital Gains Tax on Listed Shares in Nepal — FY 2083/84

The lower 3.75% rate applies only where the interest was held for more than 365 days. A holding of exactly 365 days remains in the 5% category; 366 days or more crosses that boundary.

Keep the acquisition and disposal dates used in the settlement working. Apply this distinction to the qualifying resident natural-person listed-interest transaction covered by the notice.

For a resident natural-person listed-share transaction, tax is calculated on the capital gain, not the gross sale consideration.

Conceptually: Net disposal proceeds

− tax cost / allowable acquisition basis

= capital gain

× applicable rate

= capital-gains tax

Assume a qualifying resident natural person disposes of a listed shareholding to which the later Gazette applies. The established cost basis is NPR 500,000 and net disposal proceeds are NPR 700,000, producing a gain of NPR 200,000.

If the holding period is 500 days, the rate is 3.75%. Tax on the gain is NPR 200,000 × 3.75% = NPR 7,500.

The example assumes the stated taxpayer category, an established cost basis and the notice applying to the disposal. Reconcile the broker or settlement deduction to those records.

Use the same assumed cost of NPR 500,000, net proceeds of NPR 700,000 and gain of NPR 200,000. If the qualifying listed interest was held for 200 days, the applicable rate under the later Gazette is 5%.

Tax on the gain is NPR 200,000 × 5% = NPR 10,000. A holding of exactly 365 days produces the same rate category. The higher holding-period rate is applied to the gain, not to the NPR 700,000 sale proceeds.

Where disposal does not produce a capital gain, capital-gains tax should not be calculated merely on the sale amount.

However, treatment of losses, including whether/how they may be utilised, should be considered separately under the Income Tax Act and the taxpayer's status.

For a resident entity disposing of a listed interest, the current Section 95क rate remains: 10%

The treatment should not automatically be equated with the final-tax treatment applicable to a resident natural person.

The Section 95क table currently provides: 25% for the other specified category.

But a non-resident transaction should also be checked for:

• source;

• treaty;

• PE;

• entity type;

• final/advance treatment.

Unlisted securities have separate rates.

Current FY 2083/84 working rates include:

These unlisted-interest rates are separate from the later Gazette’s 3.75%/5% regime for the specified resident natural-person listed-interest gains. Listing and taxpayer status must be checked before choosing the table.

Bonus and rights issues can alter the acquisition/cost history of holdings.

A capital-gains computation should maintain:

• acquisition date;

• source of shares;

• quantity;

• cost allocation;

• corporate-action history;

• disposal date.

Do not simply compare:

total sale proceeds − original first purchase

where multiple lots or corporate actions exist.

Where shares were acquired on several dates, the tax computation should preserve the cost and holding-period history applicable to the relevant disposed holdings according to the securities settlement/cost-basis framework.

A complete calculation record should show:

• multiple purchase lots;

• bonus shares;

• rights shares;

• partial sales;

• multiple sale dates.

Even where the capital-gains withholding is final: retain:

• broker contract notes;

• purchase records;

• sale records;

• demat statement;

• cost-basis/WACC evidence;

• CGT deduction evidence;

• settlement records.

These can be important for:

• wealth/source-of-funds explanations;

• audits;

• banking;

• future acquisitions;

• tax queries.

The rates changed in two stages during this fiscal-year framework. Finance Act 2083 raised the resident natural-person listed-interest baseline. The later Ministry of Finance Gazette notice then set reduced rates for the specified gains.

The Gazette header is dated 31 Bhadra 2083. Clause (a) addresses collection under section 95A(2)(a), and clause (b) addresses the corresponding gain rate under Schedule 1 section 1(4)(b), proviso (3). Both use the same holding-period boundary and reduced rates.

The two-page notice does not state a separate commencement day. For a transaction around the change, preserve the disposal and settlement dates and the applicable official implementation record; do not infer a transition day from a news publication date.

• Confirm seller status

• Confirm resident/non-resident

• Confirm listed/unlisted

• Determine acquisition date

• Determine disposal date

• Calculate holding period

• Establish tax cost basis

• Reconcile bonus/right issues

• Calculate net disposal proceeds

• Calculate capital gain

• Apply correct rate

• Check final/non-final treatment

• retain broker/CDSC evidence

• Reconcile annual transaction history

• Using the earlier 7.5%/10% Finance Act baseline without checking the later Gazette relief.
• Using 3.75% for a holding of exactly 365 days; that holding falls in the 5% category.
• Applying the percentage to gross sale proceeds instead of the established gain.
• Applying the listed-interest relief to an unlisted holding or a different taxpayer category.
• Ignoring acquisition history, bonus or rights issues and supporting cost records.
• Assuming an entity receives the same final-tax treatment as a qualifying resident natural person.
• Using a news report’s date as the automatic legal transition date for an older transaction.

Share-capital-gain taxation depends on taxpayer status, listing status, holding period and cost basis. Maintain transaction-level records rather than relying solely on a year-end broker summary.