Recession in the share market and realty sector has not only hit investors, but also the government’s revenue collection. Revenue from land transactions dropped five times during the first nine months of the current fiscal year compared to the same period last year. The government has collected Rs 1.54 billion revenue as of the ninth month, against Rs 5.3 billion in the same period last year. “Lately, there is a tendency of paying low land revenue and capital gain taxes by valuating land based on government fixed rate instead of market price,” said Minman Shrestha, general secretary of Nepal Land and Housing Development Association. He, however, said such practice is only rampant among common people, as entrepreneurs avoid doing so because they have to pay corporate tax from the profit and if they do not mention market price their profit is inflated. “We cannot even benefit by evading capital gain tax,” he said. Realty traders say that the sector witnessed a slowdown due to capital gain tax, requirement of income source disclosure and difficulties in getting bank loans. The government’s revenue collection from capital gain tax stands at Rs 723.2 million as of the ninth month. It was Rs 920 million during the same period last year. Realty traders should pay capital gain tax for transactions exceeding Rs 3 million. The threshold was Rs 5 million in the last fiscal year. Slowdown in the stock market also brought down the revenue from capital gain tax. Increased interest rate, liquidity crunch and requirement of income source disclosure are affecting the stock market’s growth. However, Stock market analyst Rabindra Bhattarai said the capital gain tax is not the reason behind the slowdown in the stock market. “When the capital gain tax was 10 percent in the past, the capital market was in a bullish trend,” he added. The Maoist-led government had increased this tax to 15 percent from 10 percent which is said to be the main reason behind the bearish run of the capital market. The government is carrying out homework to bring down the rate even lower than the current 10 percent.
Source:thekathmandupost