Capital gains tax on shares in Nepal: 5% or 7.5%, and who deducts it
What you actually pay selling shares on NEPSE — 5% long-term, 7.5% short-term, the weighted-average-cost gain math, who withholds it at settlement, and the hike coming in FY 2083/84.
A friend sold 200 units of a commercial bank last Falgun. He had bought them two years earlier, the price had run up nicely, and he expected a round number to land in his bank account on settlement day. The figure that actually arrived was a few thousand rupees short. He assumed the broker had overcharged and called to complain.
The broker pointed him to one line on the contract note: capital gains tax, withheld at source. He had never accounted for it, the same way most NEPSE investors never do until the proceeds come back lighter than the screen promised. The tax is small as a percentage. It is also automatic, invisible until it has already happened, and about to get bigger.
The rates that actually apply
There are two rates for a resident natural person selling listed shares, split by how long you held them. The numbers below are the FY 2082/83 rates, written into Section 95A of the Income Tax Act 2058 (statute text) and confirmed in the FY 2082/83 tax summary published by Baker Tilly Nepal (source).
| Who is selling | Listed shares | Unlisted shares |
|---|---|---|
| Individual, held more than 365 days | 5% on the gain | 10% on the gain |
| Individual, held 365 days or fewer | 7.5% on the gain | 10% on the gain |
| Company / institution | 10% on the gain | 15% on the gain |
| Non-resident | 25% on the gain | 25% on the gain |
Two things confuse people here. First, the rate direction. The lower 5% rate rewards the longer hold; the 7.5% short-term rate is the penalty for trading in and out inside a year. Some news write-ups have printed it inverted, so check the holding period against the rate before you trust any single source.
Second, the tax applies to the gain, never to the full sale value. A broker who quotes "7.5% tax on shares" without saying "on the profit" is leaving out the only word that matters. Sell Rs 2 lakh of shares that cost you Rs 1.9 lakh and the tax base is Rs 10,000, not Rs 2 lakh.
Who deducts it, and when
For listed shares you do not file anything or pay anything by hand. The tax is collected at source at the point of settlement. CDS and Clearing Ltd (the depository behind your demat account) computes the gain, the rate is applied, and the broker settles the net amount into your account. Under Section 95A the collecting party for listed shares is the entity running the securities market, and no transfer record is completed until the tax is accounted for (statute).
This mirrors how property CGT works at the Malpot office, where the Land Revenue Office withholds before clearing the transfer. The principle is the same across both: the state takes its cut at the chokepoint where ownership changes hands, so there is nothing to evade and nothing to forget.
For unlisted shares the mechanism shifts. There is no exchange in the middle, so the company whose shares are being sold collects the tax and must see proof of payment before it records the new owner. Private-company exits are slower and more paperwork-heavy for exactly this reason.
For the typical retail investor, the share CGT is a final withholding tax. The amount cut at settlement closes the matter. There is no year-end return to reconcile it against, the same way the 5% TDS on your FD interest is final and never appears again. This final-tax status was formally established in the FY 2080/81 budget and reaffirmed since (source).
How the gain is calculated: weighted average cost
The part that trips up active traders is the cost basis. Nepal does not let you pick which lot you sold. The system uses weighted average cost (WACC), and it has done so since around FY 2076/77, when CDSC replaced the older scrip-by-scrip method (source). The method is now written into the statute itself.
WACC is just the total money you put in divided by the total shares you hold:
WACC = total amount invested ÷ total shares held
Every transaction moves the average:
- A new buy at a higher price pulls your average up; a buy at a lower price pulls it down.
- Bonus shares enter your holding at zero cost. They add to the share count without adding to the money invested, so they drag the average down hard. That lower average means a bigger taxable gain whenever you eventually sell.
- Right shares enter at the price you actually paid, usually the Rs 100 par value, which sits below most market prices and also nudges the average down.
A worked illustration from ShareSansar makes it concrete: buy 100 shares at Rs 100, then 50 more at Rs 300, and your WACC is (10,000 + 15,000) ÷ 150 = Rs 166.67 per share. Receive a 10% bonus and the count rises to 165 while the money invested stays at Rs 25,000, so the WACC drops to Rs 160.61 (source).
This is why bonus shares feel like free money but quietly defer a tax bill. You did not pay for them, so the entire eventual sale price above zero is gain on those units. Cash dividends are different again: they are taxed at a flat 5% final rate cut by the company before payout, separate from CGT entirely.
The Rs 40 lakh filing line
"Final tax, no filing" holds for ordinary investors. There is one ceiling. If your total income from share gains in a single fiscal year crosses Rs 40 lakh, the final-tax shortcut ends and you must file a return (form D-4 under Section 97) and obtain tax clearance from your tax office by the end of Asoj (source).
This is the same Rs 40 lakh threshold that governs who must file an income tax return at all. Below it, the withholding at settlement is everything. Above it, the IRD wants to see the year in full. Most retail portfolios never approach the line, but a good IPO season or a concentrated win can, and the clearance requirement catches people who assumed the broker had already handled their entire tax life.
The hike coming in FY 2083/84
The 5% and 7.5% rates are correct today and through the end of FY 2082/83 (mid-July 2026). They are also on the way up.
The budget presented to Parliament on 29 May 2026 proposes raising individual share CGT to 7.5% for long-term gains and 10% for short-term gains, and reaffirms it as a final tax with no further personal liability (source). If passed, the new rates take effect around Shrawan 1, 2083. As of June 2026 this sits in the Finance Bill, not yet enacted, so treat it as a strong signal rather than a settled number until it clears.
The trajectory is worth seeing in one place:
| Fiscal year | Long-term (individual) | Short-term (individual) |
|---|---|---|
| Before FY 2076/77 | 7.5% flat | 7.5% flat |
| FY 2076/77 (2019) | 5% flat | 5% flat |
| FY 2078/79 (2021) | 5% | 7.5% |
| FY 2083/84 (proposed) | 7.5% | 10% |
The FY 2078/79 change was the one that introduced the holding-period split, taxing short-term traders 50% more than long-term holders (source). The proposed 2083/84 step would roughly double the long-term rate from where it sat for most of the last decade. If you are sitting on a long-held position and the bill passes, the difference between selling in Asar 2083 and Shrawan 2083 is real money.
The costs that CGT hides
CGT is not the only thing skimming your sale. Each trade carries broker commission, a regulator fee, and a depository charge, and they apply on both the buy and the sell side. Current figures from a licensed broker (NIMB Securities, corroborated by Investopaper):
| Cost | Rate | Notes |
|---|---|---|
| Broker commission | 0.36% up to Rs 50k, sliding to 0.24% above Rs 1 crore | Tiered per band |
| SEBON regulatory fee | 0.015% of transaction | Both buy and sell |
| DP / CDSC charge | Rs 25 flat per script | Per settlement day |
The commission tiers down as your trade size grows: 0.33% in the Rs 50k–5 lakh band, 0.31% up to Rs 20 lakh, and lower from there. None of these are CGT, but they reduce the gain CGT is then calculated on, and for small frequent trades they can outweigh the tax itself.
One sharp edge for active traders: because the CGT is levied per transaction as a final tax, a loss on one trade does not net against a gain on another within the same year. There is no portfolio-level settlement and no official mechanism to carry losses forward or claim a refund on a net-loss year, a point investors raised loudly after the FY 2083/84 budget (source). You pay on every winning sale regardless of how the rest of the book did.
A worked example
The math is clearest end to end. This is an illustrative calculation using the FY 2082/83 rates and the broker figures above, not a cited case.
Buy 200 shares of a commercial bank at Rs 500 each in Shrawan 2080 = Rs 1,00,000 invested. Hold them past the 365-day mark. Sell all 200 in Falgun 2082 at Rs 650 each = Rs 1,30,000 in proceeds.
- WACC = Rs 1,00,000 ÷ 200 = Rs 500 per share.
- Gain = Rs 1,30,000 − Rs 1,00,000 = Rs 30,000.
- Held more than 365 days, so CGT = 5% of Rs 30,000 = Rs 1,500, withheld at settlement.
- Sell-side broker commission at 0.33% on Rs 1,30,000 ≈ Rs 429, SEBON fee at 0.015% ≈ Rs 20, DP charge Rs 25.
Net into your account is roughly Rs 1,30,000 minus about Rs 1,974 in tax and charges. Now run the same sale under the proposed FY 2083/84 rate: 7.5% of Rs 30,000 is Rs 2,250, so the tax line alone rises by Rs 750 on a Rs 30,000 gain. Scale that to a six-figure gain and the hike stops being a rounding error.
Had you sold inside the first year instead, the 7.5% short-term rate would have applied today, turning the Rs 1,500 into Rs 2,250 even before the budget change. The holding-period clock is the cheapest lever you control.
What you actually need to know
- The current rates are 5% on the gain for listed shares held more than 365 days and 7.5% for 365 days or fewer, for a resident individual, withheld at settlement by CDSC under Section 95A. Institutions pay 10%, unlisted shares 10% to 15%, non-residents 25%. These hold through mid-July 2026.
- The tax is on the gain over your weighted average cost, not the sale value. Bonus and right shares lower that average and quietly raise the CGT you owe on a future sale. For most investors the withholding is final, with no filing unless your annual share gains top Rs 40 lakh.
- A hike is on the table. The FY 2083/84 budget proposes 7.5% long-term and 10% short-term from around Shrawan 2083. Until it passes it is a proposal, but if you hold a long-term position you have been deferring, the rate you sell under may depend on which side of mid-July you act.
If you are about to sell a concentrated position and want a sanity check on the WACC and the gain math before you place the order, email parjanya57@gmail.com and we can run the numbers.
This post is part of the Nepal Money Basics guide — the investing section.