KATHMANDU, Aug 25: The government collected Rs 24.86 million in revenue from close-out penalties on share transactions in Fiscal Year (FY) 2025/26, according to records from CDS and Clearing Limited (CDSC).
During the review year, investors settled Rs 99.47 million across 20,280 close-out cases. A close-out occurs in the Nepal Stock Exchange when a seller fails to transfer sold shares to the buyer’s demat account within the settlement deadline of two days of trading (T+2 settlement deadline). If the seller does not execute the electronic delivery instruction slip (EDIS) on time, they must pay a cash penalty.
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Under the provision, sellers are required to pay 20 percent of the transaction amount as compensation to the buyer. Of this penalty, 25 percent is levied as windfall gains tax, which goes to the government.
Officials at CDSC said delays in implementing the proposed “auction market” system have increased the financial burden on investors. The auction mechanism is expected to resolve problems related to close-outs and short deliveries once operational.
Over the past six years, the government collected more than Rs 146.08 million in windfall gains tax from close-out penalties. Between FY 2019/20 and FY 2025/26, there were 117,501 close-out cases, with investors paying Rs 584.33 million in penalties for delayed EDIS execution.
The highest revenue was recorded in FY 2019/20, when 20,386 close-out cases generated Rs 153.54 million in penalties. Of this, the government collected Rs 38.38 million in windfall gains tax.
