Nepal | September 21, 2020

SEBON to consult Nepse, CDSC on CGT issue

Himalayan News Service
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Kathmandu, July 21

Due to the hassles being faced by the stakeholders of the share market in implementing the new system of calculating the capital gains tax (CGT) recently introduced by the government, the Securities Board of Nepal (SEBON) has called concerned officials of Nepal Stock Exchange (Nepse) and CDS and Clearing (CDSC) Ltd for talks to seek a viable solution.

According to an official at SEBON, both Nepse and CDSC have argued that the only possible solution to calculate the CGT would be to take the share price of any particular day as the base price. However, the Inland Revenue Department (IRD) has brought a regulation to calculate CGT based on the share price of the day the transaction is made.

“We don’t have any jurisdiction to add, remove or modify the CGT calculation method,” the official added seeking anonymity.

Share investors, Nepse and CDSC have been lobbying with the government to remove the system to calculate CGT that has been set by IRD.

Moreover, investors have said that there is no point in the stock market adopting the online system for share transactions if the system to calculate CGT is not amended as they will have to visit broker houses regularly.

Releasing a press statement today, investor groups have urged investors not to sign the concerned documents by visiting the broker houses. The groups have also requested CDSC to stop the settlement of shares until the facilities are revised.

The IRD had issued a circular on June 1 last year stating that the method in which the capital gains tax is calculated would be implemented from the beginning of the ongoing fiscal year.

Different investor groups have also submitted a memorandum to the Ministry of Finance, IRD, CDSC and SEBON to find a feasible solution. The investors have urged CDSC not to clear any transaction until the CGT issue is resolved.

After receiving the memorandum from the investors, CDSC has assured them that it will not clear any transaction until the problem is resolved.

Investors have argued that if a base price is fixed by taking the share price of any particular day into account then it will be easy to determine the exact CGT to be paid. However, the IRD has strong reservations on the method that the investors have proposed. “We will not compromise on our stand and the new system to calculate CGT will be implemented,” said Yagya Prasad Dhungel, spokesperson for IRD.

A version of this article appears in print on July 22, 2019 of The Himalayan Times.

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