How to Calculate Your Real Return After Tax and Broker Commission on NEPSE

You bought a share at NPR 400 and sold at NPR 440. Your trading app shows a tidy 10 percent gain, and you feel clever. That number is fiction. Your real NEPSE return after costs is what lands back in your bank account after the broker takes commission on both the buy and the sell, after the SEBON regulatory fee, after the DP charge, and after capital gains tax is sliced off the top at settlement. On a small lot, or on a position you flipped after three weeks, those deductions can quietly swallow a third of what you thought you made, or more.

Most retail investors in Nepal never do this arithmetic. They track the price, not the proceeds. This article gives you a repeatable method to compute net return, with a full worked example in NPR that shows every deduction on both sides of the trade. Then it shows the part nobody likes to confront: how churn multiplies these costs, and why high-frequency trading on NEPSE is far less profitable than the screen suggests.

The five costs between you and your “gain”

There are five separate charges in a round trip (one buy, one sell). Four of them hit you twice, once on each leg. Learn the structure once and you can price any trade in your head.

Broker commission. This is the big one and it is tiered by trade value. Per the rates in force since Jestha 2081 (May 2024), the slabs are 0.36 percent on transactions up to NPR 50,000; 0.33 percent from NPR 50,000 to NPR 5 lakh; 0.31 percent from NPR 5 lakh to NPR 20 lakh; 0.27 percent from NPR 20 lakh to NPR 1 crore; and 0.24 percent above NPR 1 crore. The slab applies to the whole trade value, not in bands. A NPR 1 lakh trade pays 0.33 percent on the full lakh, not 0.36 percent on the first slice. There is also a minimum commission per transaction (roughly NPR 10). Note that the lower percentages only kick in on large trades, so the small retail buyer pays the highest rate, 0.36 percent, on both legs.

SEBON regulatory fee. A flat 0.015 percent of transaction value, on both buy and sell. Your broker collects it and remits it. It is small, but it is always there.

DP (depository participant) charge. A flat NPR 25 per company, per settlement, levied by CDSC through your broker. This one is brutal on small positions precisely because it does not scale. NPR 25 on a NPR 5,000 buy is half a percent before anything else; NPR 25 on a NPR 5 lakh buy is a rounding error.

Capital gains tax. CGT applies only on the sell side, and only on profit, not on the whole sale value. For individuals trading listed shares, the rate is lower for holdings over 365 days and higher for holdings under 365 days. The critical mechanical fact for return math: it is deducted at source by CDSC at settlement, so you never see the gross profit. It is gone before the money reaches you. We do not re-explain the whole CGT system here. For holding periods, the institutional rate, loss set-off, and how the final-tax treatment works, read our pillar on capital gains tax on NEPSE and the companion piece on the short-term versus long-term CGT split.

That is the full list. Commission, SEBON fee and DP charge on the buy. The same three again on the sell. Then CGT on the profit. Five cost types, seven separate deductions in a round trip.

The method: a repeatable formula

Compute it in this order every time.

1. Total buy cost = (buy price x quantity) + buy commission + buy SEBON fee + buy DP charge. This is your true cost basis, what the position actually cost you to own.
2. Gross sale value = sell price x quantity.
3. Net sale proceeds before tax = gross sale value minus sell commission minus sell SEBON fee minus sell DP charge.
4. Taxable gain = net sale proceeds before tax minus total buy cost. Critically, the taxable gain is computed after costs on both legs, so commissions reduce your tax bill slightly. (Whether your DP or broker computes the base exactly this way can vary; confirm on your statement.)
5. CGT = taxable gain x the applicable rate (short or long term).
6. Net proceeds in hand = net sale proceeds before tax minus CGT.
7. Real return = (net proceeds in hand minus total buy cost) / total buy cost.

The number from step 7 is the only one that matters. Everything your app shows you is step 2 minus step 1’s price component, and that is not your return.

A full worked example in NPR

Take a realistic small retail trade. You buy 100 shares at NPR 400 and sell all 100 at NPR 440 after holding under a year (short term). The screen says +10 percent. Let us net it out. We will use the 0.36 percent commission slab because each leg is NPR 44,000 or below, the 0.015 percent SEBON fee, NPR 25 DP charge, and a short-term CGT rate of 7.5 percent for the illustration.

The buy (100 x NPR 400 = NPR 40,000)

The sell (100 x NPR 440 = NPR 44,000)

Tax and the final number

Your real return is 3,362.37 / 40,175.00 = 8.37 percent, not 10 percent.

The price moved 10 percent. You kept 8.37. The gap, 1.63 percentage points, vanished into costs and tax. Of that gap, the broker took the largest share (NPR 302.40 across both legs), CGT took NPR 272.63, the DP charge took NPR 50, and SEBON took NPR 12.60. Roughly speaking, you handed back about 16 percent of your headline gain. On a single, clean, profitable trade with a healthy 10 percent move, that is the leakage. The leakage gets worse fast when the move is smaller or the trade is smaller.

Small positions bleed from the flat DP charge

Run the same trade at one-tenth the size: 10 shares at NPR 400, sold at NPR 440. The percentage costs scale down with the trade, but the NPR 25 DP charge does not. It is NPR 25 on the buy and NPR 25 on the sell no matter what.

On a NPR 4,000 buy, that NPR 50 of combined DP charges alone is 1.25 percent of your capital, before a single rupee of commission, SEBON fee, or tax. A 10 percent price move that returned 8.37 percent net on the NPR 40,000 trade returns noticeably less on the NPR 4,000 trade, because the fixed cost eats a far bigger bite of a smaller base. This is the quiet tax on small investors. If you are buying odd lots or tiny parcels across many companies, every company is its own NPR 25-each-way hit at settlement. The DP charge is the single strongest argument against scattering small amounts across a dozen scrips.

Churn is where the real money disappears

Now the part that should change behavior. The costs above are per round trip. Every time you sell and rebuy, you pay the full set again. The trader who flips a position ten times a year pays the buy-and-sell cost stack ten times; the investor who buys once and holds pays it once.

Walk through it. Suppose the underlying shares drift up 10 percent over a year. The buy-and-hold investor pays one round trip of costs and one CGT bill, and keeps something close to the 8.37 percent net we calculated, possibly better, because holding past 365 days qualifies for the lower long-term CGT rate. The active trader who chases the same net 10 percent through ten separate trades pays the commission-SEBON-DP stack on twenty legs instead of two, and pays short-term CGT every single time a trade closes in profit, at the higher short-term rate, with no chance to reach the long-term rate.

Picture each of those ten round trips costing roughly 0.75 to 1 percent of capital in commission, fees and DP charges (the exact figure depends on trade size and slab). Ten round trips is on the order of 7 to 10 percent of capital surrendered to costs over the year, before tax. Layer short-term CGT on every winning trade on top of that. The trader needs the market to hand them a far larger gross move just to match what the patient holder keeps. To learn to read the actual transaction prints and check what you really paid, our guide to reading the NEPSE floorsheet is the practical next step.

This is not an argument that trading never works. It is an argument that the bar is much higher than the screen suggests. A strategy that looks like it earns 15 percent gross with frequent turnover may net less than a boring buy-and-hold that earns 11 percent gross, once costs and short-term CGT are counted. If your edge per trade is smaller than your round-trip cost, you are paying the broker to lose money slowly.

The verdict

Here is the position, stated plainly. The gain on your screen is gross fiction, and most NEPSE retail investors overestimate their returns because they never net out costs. The fix is not complicated. It is the seven-step calculation above, applied honestly, every time. Compute your true cost basis on the buy. Subtract all three charges on the sell. Take CGT off the profit. Only then divide.

Do that for a month of your own trades, and two things usually become obvious. First, your actual return is lower than you believed, often by one to three percentage points per round trip, sometimes far more on small or fragmented positions. Second, frequent trading on NEPSE is a much worse deal than it feels like in the moment, because every flip pays the full cost stack again and locks you into the higher short-term CGT rate. The costs are small in isolation and ruinous in aggregate. Patient, concentrated positions in fewer companies pay the fixed DP charge less often and earn the right to the lower long-term tax rate. That is not glamorous advice. It is just what the arithmetic says.

Before you place the next order, price the round trip first. If the expected move does not clear your total cost of trading with room to spare, the best trade is often no trade.

This is analysis, not financial advice.