The Internal Revenue Department (IRD) has clarified that the capital gains tax (CGT) will serve as the final tax on profits generated from the sale of real estate.

In a letter addressed to the Nepal Land & Housing Developers' Association (NLHDA), an organization representing real estate businessmen, the department affirmed that the existing legal framework governing the sale of real estate by natural persons remains unchanged.

"The capital gains tax, filed at either 5 percent or 7.5 percent according to the prescribed rules, will be considered final for such transactions," stated the department's letter.

Rule 29 of the Economic Bill, 2080, which was presented in the Federal Parliament on Jestha 15, 2080, included a provision for a 50% discount titled "Special provision for discounts for business dealings in securities, land, and real estate." This exemption had imposed additional liabilities on investors due to the lack of established practices and transactions in the capital and real estate markets.

As per the proposed rule, if a natural person, engaged in regular business activities, incurs tax liabilities based on the income statement from share or real estate transactions, they are required to declare such transactions from the fiscal year 2076/77 to 2078/79 and pay 50% of the due tax in accordance with the Income Tax Act by the end of Chaitra 2080. The provision further states that interest will be waived, and filing taxes in this manner will exempt previous years' tax, duty, and interest.

Following the introduction of this provision in the bill, real estate businessmen expressed dissatisfaction and exerted pressure on various agencies, seeking clarification on the matter. The federation wrote a letter to the department urging them to provide a clear explanation.

Additionally, the IRD has also clarified that capital gains tax (CGT) will serve as the final tax for income generated from share trading activities.

source: sharesansar.com, 20 June 2023