Capital gains tax plunges by over three times

Adjusted price of shares — due to a flooding of bonus and rights shares — and decreasing share price have brought down the capital gain tax (CGT) collection, which is expected to drop by over three times.
The Nepal Stock Exchange (Nepse) estimated to collect Rs 270 million capital gain tax in the financial year 2009-10, a whopping fall compared to the last financial year. "By May 29, the Nepse has collected Rs 248.9 million capital gain tax," said Nepse chairman Tanka Paneru while presenting the report during the 28th annual general meeting (AGM) of the Nepse in the capital yesterday. "By the end of this financial year, we expect to collect Rs 270 million," he added.
It is over three times below the collection registered in the previous financial year. The Nepse had collected Rs 910 million CGT during the fiscal 2008-09. In the fiscal 2007-08, it had collected Rs 910 million
A capital gain tax is a tax charged on capital gains, the profit realised on the sale of a share that was purchased at a lower price. The capital gain tax is charged 10 per cent for individuals and 15 per cent for institutions.
"After the Nepse has been changed to a profit-oriented organisation, it has posted Rs 136.4 million income in fiscal 2007-08," Paneru said. Similarly, the Nepse has registered an income of Rs 158.5 million in fiscal 2008-09, which is 16.20 per cent up, compared to fiscal 2007-08. It has registered a net profit of Rs 85.4 million in the fiscal year 2008-07, an increase of 20.45 per cent compared to fiscal 2007-08.
In fiscal 2007-08, it had posted a net profit of Rs 70.9 million. The AGM has also approved a 20 per cent cash dividend from the profit of 2007-08.
"But the secondary market has not announced any dividend as it is planning to increase its capital," Paneru informed. The AGM has approved the increase in capital. According to the approved capital structure, the paid-up capital of Nepse will be Rs 300 million.
"The increase in paid-up capital will help Nepse to privatise in future," Shanker Man Singh, Nepse's general manager said
The government, Nepal Rastra Bank (NRB), Nepal Industrial Development Corporation (NIDC)and brokers are the promoters of Nepse, the only organised secondary market in the country, where 171 companies have been listed for trading in their shares. "The paid-up capital of the listed companies’ stands at Rs 75,342 million by the end of May 29, 2010," according to Nepse. However, the market capitalisation has decreased to Rs 3.79 trillion from Rs 5.13 trillion in fiscal 2008-09.