A new capital gains tax structure on share transactions has come into effect from today (Shrawan 1) with the beginning of the fiscal year 2083/84. The revised rates have been introduced through the Finance Bill 2083.

Under the new provisions, investors selling shares of listed companies after holding them for more than one year will now pay a 7.5% capital gains tax on profits. Those selling shares within one year of purchase will be subject to a 10% capital gains tax.

The government has retained the capital gains tax as a final tax, meaning investors will not have to pay additional income tax on the same gains after the tax is deducted.

Previously, long-term investors paid a 5% capital gains tax, while short-term investors paid 7.5%. The revised rates therefore increase the tax burden for both categories of investors.

The higher tax rates are expected to have a greater impact on short-term traders, while the lower tax rate for long-term holdings compared to short-term transactions continues to encourage longer investment horizons.