How does dividend tax work in Nepal?

Cash dividends paid by listed Nepali companies to individual investors are subject to a 5% withholding tax. The company deducts this at source before disbursing the cash, so you receive the dividend net of tax. You do not separately file this tax; the deduction is final. Bonus share dividends are not taxed at the time of receipt, but they affect your cost basis for CGT when you eventually sell.

What is a book closure date in Nepal?

Book closure is the period when a company closes its shareholder register to determine who is entitled to receive a dividend, bonus or rights offer. You must own the shares before the book closure start date to qualify. After the book closure, new buyers of those shares do not receive that particular dividend.

What is the record date for dividends?

The record date is the day on which CDSC takes a snapshot of the share registry to identify eligible shareholders. Because NEPSE operates T+2 settlement, you effectively need to have bought (and had the trade settle) before the record date. Buying on the record date itself is typically too late.

When do I receive my cash dividend?

After the AGM approves the dividend and book closure processing is complete, the company disburses the dividend through the banking system. The timing varies by company, but it is typically weeks to a few months after the AGM. The cash arrives directly in the bank account linked to your DEMAT.

What happens to the share price on ex-dividend date?

On the ex-dividend date the share price typically falls by approximately the net dividend amount, reflecting that new buyers will no longer receive that payout. This is the theoretical adjustment; actual market prices may differ based on demand and sentiment.

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Dividends in Nepal explained: cash, bonus, tax and key dates.

Nepali companies distribute profits in two main ways: a cash dividend or a bonus share dividend. Both involve key dates you need to track, and cash dividends come with a 5% withholding tax. Here is the full picture.

5 min read · Updated · 7 Jul 2026

What is a cash dividend?

A cash dividend is a direct payment by the company to its shareholders out of its profit. It is expressed as an amount per share or as a percentage of the par value (face value) of the share. In Nepal, most companies announce dividends at their Annual General Meeting (AGM) and seek shareholder approval before disbursing.

What is a bonus share dividend?

Instead of paying cash, a company can issue new shares from its reserves. These are called bonus shares. The quantity of shares you hold increases, but the share price adjusts on the ex-bonus date so the total value of your position is the same at the moment of adjustment. For the full mechanics, read bonus shares vs rights shares.

Many Nepali companies announce a mixed dividend: part cash, part bonus. For example, "15% bonus and 2% cash" means you get 15 new shares for every 100 held plus a small cash payout.

Key dates: book closure and record date

Two dates determine whether you qualify for a dividend:

Book closure dates: The company closes its shareholder register for a defined period. Only shareholders on record before the book closure opens are eligible. NEPSE publishes upcoming book closures. Punji's home tab shows active corporate action alerts for stocks you hold.
Record date: Within the book closure period, CDSC takes a snapshot of the register to confirm eligible shareholders. Because NEPSE settlement is T+2 (two trading days), you must buy shares at least two trading days before the record date for the trade to settle in time.

Ex-dividend date: The first day on which a buyer is no longer entitled to the upcoming dividend. If you buy on or after the ex-dividend date, you will not receive that payout. The share price typically drops by approximately the net dividend amount on the ex-dividend date.

Dividend tax: how the 5% works

Cash dividends paid by listed Nepali companies to individual investors are subject to a 5% final withholding tax. This is the standard rate in Nepal's income tax framework for dividend income from listed companies. The company deducts it at source and disburses the net amount. You do not file separately for this; the withholding is final.

Bonus shares are not taxed at the time of receipt. However, when you eventually sell those bonus shares, the lower WACC means a larger capital gain on which CGT applies. Taxes are complex; consult a tax professional for your specific situation.

When does the cash actually arrive?

After the AGM votes to approve the dividend and book closure processing is complete, the company disburses through the banking system. The cash goes to the bank account linked to your DEMAT account at the DP. The timeline varies by company; it is typically weeks to a few months after the AGM. If you have changed your bank account details, update them at your DP to avoid the payment missing you.

Tracking dividends in Punji

Punji's portfolio tracker shows upcoming book closures for stocks you hold and estimates the net cash dividend after the 5% tax, so you can factor it into your planning without manual lookups.