Nepal Capital Market Reform: 21-Point Action Plan, Capital Gains Tax Changes and What Investors Need to Know

Nepal’s capital market is set for a broad reform package as the government moves forward with a 21-point capital market strengthening and revival action plan. The proposed reforms cover capital gains tax, loss adjustment, margin lending, short selling, intraday trading, institutional investment, NRN participation and improvements to market infrastructure.

One of the most closely watched proposals is the change in capital gains tax on listed securities. Under the plan, individual investors holding shares for more than 365 days would face a 3.75% capital gains tax, while securities held for 365 days or less would be subject to 5%.

The reform package is designed to reduce the tax burden on investors, encourage longer-term participation and strengthen Nepal’s capital market.

Capital Gains Tax Proposal for Nepal Share Market

The proposed capital gains tax structure would distinguish between long-term and short-term holdings:

The plan also proposes allowing investors to offset losses from listed securities against gains from similar transactions during the same income year. According to the reported framework, capital gains would be calculated through the trading and settlement system, with tax applied to net gains.

For investors in the Nepal stock market, this loss-adjustment provision could be particularly relevant because it would allow gains and eligible losses within the same income year to be considered together rather than treating profitable and loss-making transactions entirely separately.

Important: Investors should confirm the final tax rates and implementation procedure after the relevant legal, regulatory and tax provisions are formally enacted.

Why the 365-Day Holding Period Matters

The proposed structure creates a clear distinction between short-term and longer-term shareholding.

An investor holding a listed security for more than 365 days would fall into the proposed 3.75% category, while a holding of 365 days or less would fall under the proposed 5% rate.

This approach is intended to encourage investors to take a longer-term perspective rather than focusing exclusively on frequent short-term trading.

For students and new investors taking share market training in Nepal, understanding holding periods, capital gains tax, transaction costs and risk management is an important part of learning how the NEPSE market works.

Loss Adjustment Could Change How Investors View Capital Gains

Another significant proposal is the ability to adjust eligible losses from listed securities against gains within the same income year.

For example, if an investor records gains from some listed shares but incurs eligible losses from other listed securities during the same year, the proposed framework would allow those losses to be considered against the gains.

The precise calculation, eligible transactions and implementation mechanism will depend on the final legal and regulatory provisions.

Other Major Capital Market Reforms

The 21-point action plan goes beyond taxation. Reported measures include several structural reforms intended to deepen Nepal's capital market.

1. Margin Lending

The government plans to establish a legal and regulatory framework for margin lending through licensed securities brokers.

SEBON has already been working on measures related to margin lending, intraday trading, securities lending and borrowing, and short selling.

2. Intraday Trading and Short Selling

The reform agenda proposes legal and market infrastructure for:

• Intraday trading
• Securities lending and borrowing
• Short selling
• Margin lending

These mechanisms could introduce additional trading strategies and market structures once the required regulations and systems are implemented.

3. NEPSE Index Reform

The plan also proposes restructuring the Nepal Stock Exchange (NEPSE) and developing a separate benchmark index based on factors such as tradable shares, market capitalization, financial health, liquidity, corporate governance and disclosure quality.

This could provide investors with additional ways to evaluate overall market performance.

4. Greater NRN Participation

The action plan proposes measures to facilitate Non-Resident Nepali (NRN) participation in Nepal's secondary securities market, subject to changes in relevant laws and foreign-exchange regulations.

5. More Institutional Investment

The government also plans to encourage greater participation from institutional investors, including entities such as provident funds, investment funds, insurance companies and other institutional participants.

6. Corporate Bond Market Development

Another part of the reform agenda focuses on developing Nepal's bond market, including instruments such as green bonds, social bonds, catastrophe bonds and project-specific bonds.

A stronger bond market could give investors more alternatives beyond traditional listed shares.

What Does the Reform Mean for Nepal Stock Market Investors?

The proposed reforms could affect investors in several different areas:

Tax: The proposed capital gains tax rates would be lower than the rates reported as currently applicable under the 2026/27 framework.

Investment horizon: The distinction between holdings above and below 365 days creates a tax incentive structure that places a lower proposed rate on longer holding periods.

Loss management: The proposed loss-offset mechanism could affect how investors calculate their annual taxable gains.

Trading opportunities: Margin lending, intraday trading and short selling could expand the range of strategies available to eligible market participants.

Market participation: Proposed measures involving NRNs and institutional investors could broaden the participant base.

Market infrastructure: Reforms to NEPSE, securities brokers and clearing infrastructure could change how the market operates over time.

Why Share Market Training Is Important

Policy changes can create new opportunities, but understanding the rules is equally important.

Investors learning about the Nepal share market should understand:

• NEPSE technical analysis
• Fundamental analysis
• Company financial statements
• Capital gains tax
• Portfolio management
• Risk management
• Trading psychology
• Support and resistance
• Candlestick patterns
• RSI and MACD
• Moving averages
• Market cycles
• IPO and FPO analysis
• Dividend and corporate actions
• Trading volume and turnover
• Long-term investment strategies

For beginners searching for share market training Nepal, NEPSE analysis course Nepal, stock market training Kathmandu, or investment training Nepal, structured education can help build a stronger foundation before making investment decisions.

Sarbaguna Share Market Training Nepal

Sarbaguna provides market-focused educational resources and share market training in Nepal for individuals who want to understand the Nepal stock market, NEPSE analysis and investment concepts.

Visit Sarbaguna.com for market education, stock-market resources and training information.

For training-related inquiries, contact Deep Thapa via WhatsApp at 9849290806.

What Investors Should Watch Next

The 21-point reform plan contains multiple measures that require detailed rules, legal amendments, regulatory implementation and supporting market infrastructure.

Therefore, investors should distinguish between:

1. Policy announcements and reform proposals
2. Approved legal provisions
3. SEBON regulations and directives
4. Actual implementation in the trading and settlement system

SEBON's recent publications also show ongoing work around capital-market development, margin lending and secondary-market reforms.

Investors should therefore check official regulatory announcements before making decisions based on a proposed tax rate or trading facility.

Frequently Asked Questions — Nepal Capital Market Reform

What is the proposed capital gains tax for shares held for more than 365 days?

Under the reported reform proposal, individual investors would pay 3.75% capital gains tax on securities held for more than 365 days.

What is the proposed capital gains tax for short-term share investments?

Shares held for 365 days or less would have a proposed capital gains tax rate of 5%.

Can share market losses be adjusted against gains?

The reform plan proposes allowing losses from eligible listed-security transactions to be offset against gains from similar transactions within the same income year.

What is Nepal's 21-point capital market reform plan?

It is a broad reform package covering taxation, market infrastructure, trading mechanisms, institutional investment, NRN participation, NEPSE reform, the bond market and other areas of Nepal's capital market.

Does the reform include short selling?

Yes. The reform agenda includes developing the legal and market infrastructure required for short selling, securities lending and borrowing and related trading mechanisms.

Does the plan include margin trading?

Yes. Margin lending is included in the reform agenda, and SEBON has separately been working on a framework for margin lending.

Why is share market training important?

Share market training can help investors understand fundamental analysis, technical analysis, risk management, taxation, portfolio management and Nepal's regulatory environment before making investment decisions.

Where can I learn about Nepal's stock market?

Investors looking for share market training Nepal, NEPSE analysis training, stock market training Kathmandu and related investment education can explore the resources and training information available through Sarbaguna.

Conclusion

Nepal's proposed 21-point capital market reform plan represents a wide-ranging effort to strengthen the country's securities market. The proposed 3.75% capital gains tax for holdings above 365 days, 5% rate for holdings of 365 days or less, and proposed loss-offset mechanism are among the most important changes for individual investors.

At the same time, measures involving margin lending, short selling, intraday trading, NRN participation, institutional investment, NEPSE restructuring and bond-market development could have broader implications for Nepal's capital-market ecosystem.

Investors should follow official implementation notices and understand the final rules before acting on the proposed changes.

For Nepal share market training and NEPSE analysis education, connect with Sarbaguna and Deep Thapa on WhatsApp: 9849290806.