KATHMANDU: A major controversy has erupted in the capital market following a provision in a draft law that proposes a 1% transfer fee on share transactions exceeding Rs 2.5 million.

The draft specifies that for stock exchange transactions, brokers must collect this fee and deposit it into the Federal Consolidated Fund, sparking widespread investor panic over rising trading costs and dropping the market index by 16.54 points.

While market analysts slammed the move as counterproductive to liquidity and capital gains, officials quickly backtracked under intense public pressure.

It has since been clarified that the current draft is merely a proposal released for public feedback, and the controversial provision will be revised and amended based on stakeholder recommendations before the legislation is finalized.