Though, the government has slashed capital gains tax (CGT) on sale of shares from 7.5 per cent to 5 per cent, the complexity of calculation – that came into effect from last Wednesday – has hit the implementation as neither regulator not players know how to implement the new tax calculation method.
The new calculation requires the share investors personally visit brokerage firms to self declare the amount of capital gains by taking the weighted average of the shares they had purchased on different dates. But the tax authority has also not fixed the cutoff date to calculate the cost price of purchased shares. The diktat from the tax authority is not only impractical but also traditional, as the investors need not visit the brokerage firm to sell or buy the share, instead they can order online from home or office.
The share investors, brokers and even the regulatory authority have no idea how to implement the government's new policy as according to the new rule, investors have to take the sum of prices of all shares that they purchase at different prices and divide the total amount by the number of shares to get the cost price, which is deducted from the current share price of the particular company to estimate the amount of capital gains.
Capital gain tax refers to the tax on profit that arises from the sale of shares, or any property.
The Stockbrokers’ Association of Nepal has asked investors to appear with evidence to estimate the cost price while selling shares as under the new rule, sellers have to consider the prices of all shares – even though they intend to sell only a portion of the shares they hold – to settle CGT as only the investors can self-declare the CGT after calculating their share cost.
The investors, thus, threatened the Finance Ministry to launch a protest, if the government does not resolve the problem as soon as possible. “The government must simplify the rule for computing capital gain tax.”
Similarly, the Securities Board of Nepal is also not clear about how to implement the new CGT calculation. Since the issue is related to tax, the capital market regulator can also not take any decision without prior approval from the Finance Ministry.
According to the Nepal Investors’ Forum, investors could not be present at their stockbrokers’ office, every time they sell shares as they have made to bear an extra burden by the new law.
The Forum also complained that the tax authority has also not fixed the cutoff date to calculate the cost price of purchased shares. Earlier, the government had been levying tax by considering the reference price of shares on January 15, 2016 to calculate capital gain.
The new calculation requires the share investors personally visit brokerage firms to self declare the amount of capital gains by taking the weighted average of the shares they had purchased on different dates. But the tax authority has also not fixed the cutoff date to calculate the cost price of purchased shares. The diktat from the tax authority is not only impractical but also traditional, as the investors need not visit the brokerage firm to sell or buy the share, instead they can order online from home or office.
The share investors, brokers and even the regulatory authority have no idea how to implement the government's new policy as according to the new rule, investors have to take the sum of prices of all shares that they purchase at different prices and divide the total amount by the number of shares to get the cost price, which is deducted from the current share price of the particular company to estimate the amount of capital gains.
Capital gain tax refers to the tax on profit that arises from the sale of shares, or any property.
The Stockbrokers’ Association of Nepal has asked investors to appear with evidence to estimate the cost price while selling shares as under the new rule, sellers have to consider the prices of all shares – even though they intend to sell only a portion of the shares they hold – to settle CGT as only the investors can self-declare the CGT after calculating their share cost.
The investors, thus, threatened the Finance Ministry to launch a protest, if the government does not resolve the problem as soon as possible. “The government must simplify the rule for computing capital gain tax.”
Similarly, the Securities Board of Nepal is also not clear about how to implement the new CGT calculation. Since the issue is related to tax, the capital market regulator can also not take any decision without prior approval from the Finance Ministry.
According to the Nepal Investors’ Forum, investors could not be present at their stockbrokers’ office, every time they sell shares as they have made to bear an extra burden by the new law.
The Forum also complained that the tax authority has also not fixed the cutoff date to calculate the cost price of purchased shares. Earlier, the government had been levying tax by considering the reference price of shares on January 15, 2016 to calculate capital gain.
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