KATHMANDU: Commodities marketeers have urged the government to withdraw Capital Gain Tax (CGT) and introduce turnover charge. The government introduced 10 per cent CGT on profits from individual transactions from the fiscal year 2008-09. CGT is higher that the organizational gain of 15 per cent.

CGT policy of the government is impractical and not good for growth of derivative market, said Santosh Pradhan, managing director of Nepal Derivative Exchange Ltd (NDEX). He suggested adopting turnover charge on a periodic basis — end of single contract or end of the fiscal year. “People should have the right to settle profits and loss of a contract,”

he said.

Three commodities exchanges — Commodities & Metal Exchange Nepal Ltd (COMEN) Mercantile Exchange Nepal Ltd (MEX) and NDEX — are working in Nepal to provide investment opportunities to around 2,000-3,000 people. The majority of transactions of community exchange is in gold and crude oil, products not produced in Nepal.

“Over 90 per cent people want to invest in gold and crude oil,” said Krishna Giri of Kashtamandap Clearing House. Nepal has only a recent history of derivative market, which opened with COMEN at the end of 2006. MEX is celebrating its first anniversary and NDEX is just a few days old.

COMEN has been providing trade services in agriculture goods. It will build warehouses to improve services. It also applied to Securities Board of Nepal (Sebon) on November 11, 2009 for starting a new stock exchange.