Kathmandu. Stock investors were very excited since the formation of the government under the leadership of Prime Minister Balendra Shah (Balen).

After the formation of the government under the leadership of Shah, the Rastriya Swatantra Party (RSP) got nearly two-thirds of the votes in the elections held on March 7 and 24.

Investors, who had been confused about the profit tax and other issues for a long time, were excited after getting a government with about 2-thirds of the votes. Also, the investors were excited by the provisions mentioned in the promise made by the RSP during the elections.

It was expected that there would be policy stability in the market, the capital market would gain momentum and investor confidence would increase. However, even after seven months of the formation of the government, the stock market has not seen the expected recovery.

The government is making every effort to increase the stock market.

The government has also made various policy provisions for capital market reform in the budget for the current fiscal year 2083/84. The government has ended the confusion in the capital gains tax through the budget.

The budget made a provision that long-term investors will have to pay 7.5 percent capital gains tax on the profits made from the sale of shares and 10 percent for short-term investors. Finance Minister Dr. Swarnim Wagle had claimed that this would be the final profit tax. Later, the government cut the profit tax drastically.

The meeting of the Council of Ministers held on September 14 decided to fix the new rate of capital gains tax as per the proposal of the Ministry of Finance.

On September 22, the government published a notice in the gazette stating that the investors who hold the shares for more than 365 days will have to pay 3.75 percent and those who sell their shares for 365 days or less will have to pay 5 percent profit tax.

The government thought that after the huge cut in the profit tax, the market would bounce back overnight. But the market has not been able to trust the government. Various statistics have proved that the market has not been able to trust the government.

Although the government has reduced the rate of capital gains tax on share trading, the market has not been enthusiastic about it. In the first 3 months of the current financial year, the capital gains tax received by the government from share trading has decreased significantly compared to the same period of the previous financial year.

According to CDS and Clearing Limited, capital gains tax of Rs 1,75,64,10,767 has been collected till the end of October of the current financial year. Such tax collection was Rs 3,27,25,446 till the end of September of the last financial year.

In the current financial year, the capital gains tax was collected at Rs 62,49,65,315. Similarly, in August, the capital gains tax was collected at Rs 63,27,46,530. Meanwhile, the capital gains tax has come down to Rs 49,86,98,921 in September. The capital gains tax has decreased by more than Rs 13.40 crore in September compared to August.

Experts say that although the government has adopted a policy to encourage investors by reducing the rate of capital gains tax on share trading, the market has not been enthusiastic about it.