More

    What is the history of Nepali stock market till date?

    Find out the history of Nepal Stock Exchange till date.

    Kathmandu । While the issue of capital gains tax is becoming very complicated in the share market, a statistic has shown that the capital gains tax collected in different fiscal years has greatly affected the share market.
    After the ministerial decision of December 10, 2008, when calculating capital gains tax on securities trading from the annual budget of the Fiscal Year 2067/67, the interest of the body will be deducted. In such a body, provision was made to be based on the weighted average cost of interest owned by that person on that date.
    The calculation of capital gain on the basis of weighted average has been started from 1 July 2076. As soon as the calculation of profit tax has started, there is panic among the investors.

    Investors have been overwhelmed by the misleading and incompetence of the Securities and Exchange Board leadership.
    The psychological scare of investors is evident from the history of loss to the state.

    The best and most scientific method for calculating capital gains tax is considered to be weighted average method. The adjustment method currently being used by Nepse is also a kind of weighted average calculation. In this method, the average cost is calculated as the purchase price of the overall company’s book close price. Its refined form calculates the average cost weighted for each investor based on the actual cost.


    Generally, the data from FY 2060/061 to 2075/076 shows the tendency of capital gains tax to increase and decrease when the Nepse index rises.
    When the government increased the rate of capital gains tax in the fiscal year 2066/67, the revenue collection from this sector was not as expected and the market was also very low.

    In the fiscal year 2060/061, the Nepse index was at 222 points. The share turnover during this period was Rs 2.14 billion. At that time, the government had received only Rs 3.1 million in capital gains tax.
    In the fiscal year 2061/06, the Nepse index was around 286. The market turnover was around Rs. 4.5 billion at an average of Rs. 286 crore. However, the state has received a little more than Rs 28.5 million in profit tax.
    In the fiscal year 2062/06, the Nepse index was around 386. The stock market has risen 100 points this year. Despite the rise in the market, the share turnover was only around Rs 3.5 billion. Despite the decline in transaction amount, the capital gains tax received by the state has increased significantly that year. The state had received Rs 62.1 million from capital gains tax that year.
    A statistic has shown that the share market has improved a lot in the fiscal year 2063/06. According to the data, the market has risen to an average of 683 points. In the same year, the market has seen double digit improvement. This improvement in the Nepse index has also had a positive effect on the transaction amount.


    The transaction amount was around Rs 8.40 billion that year. In that year, the state has also collected capital gains tax of around Rs. 233.6 million.


    It is seen that the share market is on the path of reform even in the fiscal year 2064/06. This year, the market has reached an average of 963 points. In that year, the transaction amount has increased almost three times in the same period of the previous year.

    Shares worth Rs 22.82 billion were traded in the fiscal year. In the same year, the state collected capital gains tax of Rs. 874.7 million from the share market.
    In the fiscal year 2065/06, the share market saw a sudden decline. The decline affected the transaction amount. But the capital gains tax received by the state was not affected. That year the market stopped at 749 points. In the same year, the transaction amount decreased to a little more than Rs. 21.68 billion. What is different and interesting about this is that the share market declined and the transaction amount declined.


    But there was no reduction in state taxes. In that year, the state collected capital gains tax of around Rs 931.3 million from the share market. This year, the then Finance Minister Dr. Baburam Bhattarai had brought the budget.
    Dr. At that time, Bhattarai had discussed Share Banar as a gambling game. The effect of his speech was seen in the fiscal year 2066/067. The stock market plummeted that year. And, the Nepse index stopped at 477 points. In the same year, the transaction amount halved to Rs. 11.86 billion. In that year, the capital gains tax received by the state from the share market also decreased to around Rs. 267.1 million. Not only did the transaction amount decline this year, but the capital gains tax received by the state also decreased by about Rs. Therefore, the state has lost a lot this year along with the investors.


    Similarly, there was no improvement in the share market in the fiscal year 2067/08. That year, the market returned to the level of 5 fiscal years ago. The stock market stopped at 362 points in that year. Shares were traded at an average of Rs 6.68 billion that year. And, the state received an average capital gains tax of Rs 66.1 million from investors.


    In FY 2068/09, the market increased slightly and stopped at 389 points. This year, the transaction amount has slightly increased to Rs. 10.29 billion. The capital gains tax received by the state also increased slightly to an average of Rs 69 million.
    In FY 2069/07, the market has increased and stopped at 518 points. Shares worth over Rs 22.05 billion were traded this year. This year, the capital gains tax received by the state has increased to Rs. 168 million.

    In FY 2070/07, the market doubled from the previous year and reached 1036 points. The transaction amount has also increased to Rs 77.30 billion this year. The capital gains tax received by the state also increased to Rs. 743.5 million.
    In the Fiscal Year 2071/07, the market has seen a slight decline. The market has seen some declines this year. The market has stopped at 961 points. Shares worth Rs 65.34 billion have been traded this fiscal year. Despite the decline in the Nepse index and transaction amount, the capital gains tax received by the state has increased this year. This year, the capital gains tax has risen to Rs 815.3 million.
    In the fiscal year 2072/07, the Nepse index has increased by 1718 points and the turnover has reached Rs. 163.96 billion while the state has received an average of Rs. 1.399 billion.
    In the fiscal year 2073/07, Nepse fell and stopped at 1582. Despite the decline in Nepse, the turnover was Rs 204.79 billion. Similarly, the state has received capital gains tax of Rs 1.45 billion.
    In FY 2074/07, the market has declined further. This year, the market has stopped at 1338. With a turnover of Rs 127.79 billion this year, profit tax has fallen sharply. The state received only Rs 476 million in capital gains tax that year.
    Similarly, in the Fiscal Year 2075/076, the market has come down further and stopped at 1259 points. With a turnover of Rs 108 billion this year, the state has received only Rs 641.4 million in capital gains tax.

    When did the profit tax start in the stock market?
    The practice of levying tax on capital gains earned from securities trading has started in Nepal since 2058 BS.
    As per Section 89 (a) of Income Tax Act, 2058 In the trading of securities of listed companies, the government deducts the advance capital gains tax on the profit earned from the sale of its investment by considering the last price of that date as the purchase price.

    Securities are traded through member brokers in Nepse’s system as per the investor’s order and its clearing is done through CDS and clearing system. For trading, Nepse has given access to the trading system to the member brokers.
    After the transaction, the concerned RAFSAF members obtain the necessary information for the purpose of capital gains tax of their clients and perform the work of RAFSAF through CDS and clearing system. The system then deducts the tax and deposits the amount in the account opened by Nepse for the purpose of capital gains tax.

    As per the provision of the Income Tax Act, 2058 BS, the institution working in the securities exchange market has made an arrangement to deduct the advance tax and file it.

    Market dicline reason


    To deal and clear securities in the past Since the work is being done by Nepal Stock Exchange (NEPSE), based on the data submitted by NEPSE from the member brokers. Since the capital gains tax has been deducted and paid, the work of RAFSAF has been started from CDS & Clearing with the transaction of completely intangible securities from January, 2072. Capital gains tax was to be deducted through the same system.

    Comment Down:

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    Related

    Last update

    MUST READ