Gold and silver traders across Nepal have launched a protest movement in response to the government’s new tax policies introduced in the budget for the fiscal year 2082/83. The budget includes a 2% luxury tax on gold and a 13% value-added tax (VAT) on diamonds and other precious stones.
The protest is being led jointly by the Federation of Nepal Gold and Silver Dealers’ Association, Nepal Gold, Silver, Gem, and Jewelry Dealers’ Association, and the Federation of Handicraft Associations of Nepal.
Shops Closed, Banners Raised
In protest, traders have shuttered their jewelry shops, pasting banners and listing demands outside. Just five days after Finance Minister Bishnu Prasad Paudel announced the budget, traders began their protest, with shop closures seen across major cities since Jestha 20.
Until now, there was no luxury tax on gold, and VAT was not applicable on diamonds. If the budget is implemented as proposed, customers will pay an additional 2% on every tola of gold, and sellers will have to collect 13% VAT on diamonds and gems.
Why Are Gold and Silver Traders Protesting?
According to traders, these new tax policies will increase the price of gold and jewelry, discouraging consumers and threatening their businesses.
Gold and silver have deep cultural significance in Nepal, especially during weddings and festivals. Traders argue that treating them as luxury items is unfair. They also criticize the government for not consulting them before implementing such impactful changes.
Former association president Manik Ratna Shakya warns that the taxes could drive up gold prices by up to Rs. 60,000 per tola. He says that after accounting for multiple layers of markup—bank to wholesaler, wholesaler to retailer, and retailer to consumer—the 2% luxury tax could compound into a 6% rise, and with an added 13% VAT, the total impact could reach 19%. Combine that with the existing 10% customs duty, and the final price hike could become unsustainable.
Nepal’s Gold Already More Expensive Than India
Nepalese gold is already significantly more expensive than Indian gold. This is primarily due to customs policies: Nepal charges a 20% customs duty on gold, while India charges only 6%. With an open border between the two countries, illegal imports from India could rise sharply if Nepalese prices surge further.
“There’s already a price gap of at least Rs. 35,000 per tola,” says Shakya, adding that gold smuggling in border towns like Birgunj, Butwal, and Nepalgunj may increase if the new taxes go into effect.
Ready to Withdraw Protest If Demands Are Met
Traders say they are willing to call off the protest if the government agrees to scrap the newly proposed tax rates. On Friday, traders met and decided to continue the protest, including a possible move to street demonstrations.
They’ve also approached lawmakers, urging them to raise the issue in Parliament. “We’ve requested MPs to voice our concerns in the House,” said Shakya.
Negotiations with the government are ongoing, and traders are awaiting a clear response before deciding their next steps. Shakya expressed hope that the taxes might be withdrawn, sharing that even Nepali Congress leader Sher Bahadur Deuba had reportedly opposed the move.
Traders Put Forward Three Key Demands
- Remove the newly imposed luxury tax and VAT on gold, diamonds, and gems.
- Engage in proper consultation with the trading community before introducing such measures.
- Develop specific laws and regulations tailored to the gold and silver business.
