Gold and silver traders across Nepal have once again taken to the streets, demanding the government roll back new taxes imposed on the precious metals and related items.
Organised by the Federation of Nepal Gold and Silver Gem and Jewellery Associations and the Nepal Gold and Silver Dealers’ Federation, the protestors carried banners with slogans calling for the removal of the 2% luxury tax on gold, the 13% VAT on precious diamonds and gemstones, and a reinstatement of 6% customs duty on gold imports. They also demanded the formulation of clear and consistent policies governing the gold and silver trade.
The protests were reignited after Finance Minister and Deputy Prime Minister Bishnu Prasad Paudel defended the tax measures during a session of the National Assembly on Wednesday. He argued that the luxury tax was introduced to ensure greater transparency in gold transactions and to help Nepal exit the Financial Action Task Force’s (FATF) grey list.
Paudel also clarified that the government had not introduced a new tax, but had merely removed the minimum threshold of Rs 1 million, which previously determined whether the luxury tax applied to gold purchases.
Displeased with the finance minister’s explanation, traders resumed their protests on Thursday, accusing the government of burdening the sector through the fiscal policy introduced in the new budget.
Previously, the traders had suspended their protests on June 19, following assurances from the government that their demands would be addressed during budget revisions. However, with no progress made, the traders say they have been forced back onto the streets.
Under the new budget, any purchase of gold—regardless of value—is now subject to the 2% luxury tax, whereas previously only gold jewelry above Rs 1 million was taxed. Wholesalers and banks selling raw gold bars are also now subject to this tax.
Traders say that once VAT, the 2% luxury tax, and other levies are combined, customers are now facing an effective minimum of 6% in luxury-related taxes on all gold jewelry purchases, putting further strain on the already struggling jewelry industry.
