Nepal Capital Gains Tax Cut: 3.75% and 5% Proposed for Shares
Updated · 4 min read
The government has proposed halving capital gains tax on share transactions to 3.75% and 5%, and letting losses offset gains within the same income year. What changes, what it saves, and what has to happen first.
If you sold one scrip at a Rs 40,000 loss and another at a Rs 50,000 profit in the same income year, you still paid capital gains tax on the full Rs 50,000. The loss counted for nothing. Under a proposal in the government's capital market reform action plan, it would.
This is a proposal, not law. It cannot take effect until the tax laws, the supporting regulations, and the transaction and settlement systems are amended. No effective date has been announced, and the rates in force today still apply.
Both rates cut in half
| Holding period | Current rate | Proposed rate |
|---|---|---|
| More than 365 days | 7.5% | 3.75% |
| 365 days or less | 10% | 5% |
Both rates are halved, so the gap between them survives intact. Holding past the one-year mark still costs less tax than trading inside it — the incentive to hold is unchanged in relative terms, just cheaper in absolute terms.
The bigger change: losses would offset gains
Capital gains tax is currently assessed transaction by transaction. Every profitable sale is taxed; losing sales do nothing for your tax bill. An investor whose portfolio shrank over the year can still end up writing a cheque to the tax office.
The proposal introduces a mechanism to adjust losses from share transactions against profits from other share sales within the same income year, so tax is collected only where the investor records an overall net profit. Two short-term sales, one income year:
| Item | Today (10%, no offset) | Proposed (5%, net) |
|---|---|---|
| Sale A — profit | +50,000 | +50,000 |
| Sale B — loss | −40,000 | −40,000 |
| Amount taxed | 50,000 | 10,000 |
| Tax due (Rs) | 5,000.00 | 500.00 |
The rate cut alone would have taken that bill from Rs 5,000 to Rs 2,500. Netting takes it to Rs 500. For anyone trading more than a handful of scrips a year the offset rule is the larger change by some distance, and unlike the rate cut it removes an outcome most investors consider unfair rather than merely expensive.
Capital gains tax as a final tax
The proposal also treats capital gains tax as a final tax for individual investors: the tax deducted at the point of sale settles the matter, with no carrying share gains through into the annual income tax computation.
It also explains why this cannot ship quickly. The adjustment is meant to happen automatically through the transaction and settlement system, which means the netting logic has to live inside the systems that clear your trades rather than in a form you file later. That is a systems change, not a circular.
Who this helps most
- Active traders. The short-term rate drops from 10% to 5% and the netting rule compounds with it — both of the things that hurt frequent traders move at once.
- Diversified portfolios with a losing tail. If some positions are underwater while others are harvested, you stop paying tax on gains the portfolio never actually made.
- Least affected: single-scrip long-term holders sitting on gains. With no losses to offset, a straight halving of 7.5% to 3.75% is the whole benefit.
What has to happen next
- An amendment to the tax law.
- Supporting regulations setting out the mechanics.
- Changes to the transaction and settlement systems so the offset computes itself.
Until those land, the current schedule applies: 7.5% and 10%, assessed without loss offset. Either way the tax is measured against your weighted average cost, so an accurate cost basis decides the bill. The portfolio tracker keeps that per holding and applies the schedule in force to every transaction.
This article describes a proposed tax change for general information. It is not investment, tax or legal advice — confirm your own position with a qualified advisor before acting.
NepsezAI provides information and analysis only. Nothing here is registered investment advice or a recommendation to buy or sell any security.