Capital Gains Tax on Shares Hiked; Real Estate Registration Fees Set to Rise

KATHMANDU — In a major fiscal update presented in the new budget, the government has increased tax rates for both the stock market and real estate transactions, even as it explicitly clarified the legal nature of capital gains.

Under the new provisions of the Financial Bill, the capital gains tax (CGT) on share trading has now been legally classified as a final withholding tax, putting an end to long-standing confusion regarding additional income tax liabilities for investors. However, the rates for this tax have been scaled upward:

• Short-term Share Trading: Investors selling shares held for less than one year will now face a 10% capital gains tax, up from the previous rate of 7.5%.

• Long-term Share Trading: For shares held and sold after one year, the tax rate has been increased to 7.5%, up from the previous rate of 5%.

Simultaneously, the government has targeted the real estate sector by raising the property registration fee. Home and land buyers, who previously paid a 5% registration fee, will now be required to pay 7.5% for real estate registration starting next fiscal year.

Market analysts suggest that while the final tax declaration brings much-needed legal certainty to equity investors, the simultaneous hike in transactional costs for both shares and property could temporarily cool down trading volumes in both markets.