Beginner’s Guide to Filing Capital Gains Tax on Shares in Nepal (2025 Update)

Introduction: The Hidden Cost of Your NEPSE Profits

If you've made a profit selling shares in Nepal’s stock market, you’ve probably heard about Capital Gains Tax (CGT). But how does it work? When do you pay it? What if you sell through TMS, or buy IPOs and sell later?

In this guide, we simplify everything—from CGT rates to filing your taxes, with real-life examples, online portals, and common mistakes to avoid.

1. What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax you pay when you sell an asset (like shares) for a higher price than you bought it. In NEPSE, this applies when:

• You sell ordinary shares, mutual funds, or IPOs

• The selling price > purchase price

The tax is applied only on the profit, not the full sale amount.

2. Who Needs to Pay CGT in Nepal?

CGT is applicable to:

• Individual investors (you and me)

• Institutional investors (companies, cooperatives)

• Sellers in secondary market transactions

Even if you're not an active trader—just a casual IPO investor—you are still liable to pay CGT when you sell shares for a gain.

3. Capital Gains Tax Rates in Nepal (2025)

As per current Income Tax Act provisions:

✅ Bonus shares and dividends are not taxed as capital gains (but may impact purchase price calculation).

4. How to Calculate Capital Gains Tax on Shares

Step 1: Identify your purchase price

This includes:

• IPO allotment price

• Bonus share adjusted cost

• Right shares purchase price

Step 2: Identify your selling price

• The price you sold your shares on TMS/NEPSE

Step 3: Calculate Capital Gain

Capital Gain = Selling Price - Cost Price

Step 4: Apply Tax Rate

• 5% or 7.5% (depending on holding period)

Example 1: IPO Sale Within 1 Year

• Bought: NRIC IPO at NPR 100

• Sold after 3 months: NPR 300

• Profit = 300 - 100 = NPR 200

• CGT = 7.5% of 200 = NPR 15 per share

Example 2: Share Sale After 1 Year

• Bought: NLIC at NPR 900

• Held for 14 months

• Sold: NPR 1300

• Profit = NPR 400

• CGT = 5% of 400 = NPR 20 per share

5. CGT Deduction at Source (TDS) vs Manual Filing

In most cases, your broker deducts CGT automatically during the settlement.

✅ You still need to file it during annual income tax filing (if applicable)

Broker's Role:

• Deduct CGT at time of sale

• Deposit to IRD on your behalf

• Issue CGT Certificate

6. How to File Capital Gains Tax (CGT) in Nepal: Step-by-Step

🔷 Option 1: Through Your Broker (Simplest)

1. Sell shares via TMS

2. Broker auto-calculates and deducts CGT

3. They deposit it to the government and give you:

   • CGT payment slip

   • Capital gain breakdown

✅ This is enough for most retail investors.

🔷 Option 2: Manually via Inland Revenue Department (IRD) Portal

Used by:

• Institutions

• Individuals with self-declared sale gains

• Manual transactions (e.g., physical shares, inheritance)

Step-by-Step:

1. Visit: https://taxpayerportal.ird.gov.np

2. Login using PAN and password

3. Go to "Return Filing" → "Capital Gains Tax Filing"

4. Enter:

   • PAN of buyer/seller

   • Share details (company, quantity, dates)

   • Purchase and sale price

5. System calculates CGT

6. Pay through connectIPS or bank voucher

7. CGT on Bonus Shares and Right Shares

🔸 Bonus Shares

Not taxed when received, but they affect average cost price.

Example:

• Bought 10 shares @ 100 = NPR 1000

• Got 10 bonus shares

• Now you have 20 shares

• Average cost = NPR 50 per share

If you sell at 200 → Profit = 200 - 50 = 150 → Taxed accordingly

🔸 Right Shares

Included in cost price based on purchase price.

8. Mutual Funds and CGT

If you sell mutual fund units (e.g., NIBLSF, NESDO MF):

• If held < 1 year → 7.5% CGT

• If held > 1 year → 5% CGT

• Auto-deducted by the fund manager or broker during sale

9. Do I Have to File If CGT is Already Deducted?

• If you're only investing occasionally, and CGT was deducted by your broker → No separate action needed

• If you're filing annual income tax, include CGT income in your submission

10. Tips for Smooth CGT Filing

✅ Maintain clear records of:

• Purchase price, date, and source (IPO, secondary, right)

• Sale date and price

• Bonus and right allocations

✅ Collect CGT certificates from your broker

✅ Download transaction history from MeroShare or TMS

✅ Use Excel to track CGT per share

✅ Consult a tax advisor if:

• You have large capital gains

• Multiple DEMATs/family accounts

• You are filing as a business entity

11. Penalties for Not Paying CGT

The government may:

• Levy interest and fines

• Restrict IPO applications

• Audit your PAN account

• Deny tax clearance certificates

Even if it’s a small amount, always comply.

12. Filing CGT as a Woman Investor, Cooperative, or Minor

• If you use a family member’s DEMAT → CGT applies based on the PAN used

• For women cooperatives or savings groups, one central PAN may be used → Ensure tax is filed correctly

• Minors: Use guardian’s PAN for filing

13. Future Changes to CGT in Nepal (2025–2026)

Expected reforms include:

• Single flat rate CGT (possibly 6% for all)

• CGT automation through blockchain-based trade records

• Linking IPO allotment directly with PAN for better compliance

• Unified annual report system for investors

Stay updated with:

• IRD notices

• SEBON circulars

• Budget announcements

Conclusion: File Right, Stay Right

Filing capital gains tax in Nepal is no longer optional—it’s essential for legal compliance, financial planning, and portfolio tracking. Whether you're an IPO investor, long-term holder, or day trader, understanding CGT ensures:

✅ Peace of mind
✅ Better investment decisions
✅ Eligibility for tax refunds and loans

“Profits without compliance lead to problems. File your CGT smartly and grow your wealth legally.”