Gold dealers meet PM Oli and demand for removal of luxury tax on gold sale

By A Staff Reporter,Kathmandu, June 18: The leadership of organisations related to the gold and silver entrepreneurs has drawn the attention of Prime Minister KP Sharma Oli to the provision of imposing a 2 per cent luxury tax on gold and silver transactions and 13 per cent VAT on diamond in the budget statement for the upcoming fiscal year.

In a meeting held at the Office of the Prime Minister and Council of Ministers Singha Durbar on Tuesday, a team, including President of the Federation of Nepal Gold and Silver Dealers' Association Arjun Rasaili and President of Federation of Nepal Gold Silver Gem and Jewellery Associations Kishan Sunar and President of Nepal Gem and Jewellery Association Suman Man Tamrakar demanded a reconsideration as the implementation of the tax would ruin their businesses. 

The organisations warned that Nepali businesses would be forced to go on a strike if the provision remained in place as tax and customs rates were higher than those of neighbouring India. Prime Minister Oli assured gold entrepreneurs that he would coordinate with the concerned ministries to find a solution to the problem raised by them through dialogue.

The Prime Minister said that efforts will be made to fulfill the demands until they are met, urging people not to take the path of agitation. The jewellery entrepreneurs are in protest since Thursday demanding the removal of the luxury tax on gold and 13 per cent VAT on diamonds. The government has decided to impose a luxury tax of 2 per cent on the purchase of gold, effective from next fiscal year 2025/26.

As part of the protest, gold and silver traders of Kathmandu held a sit-in on New Road in Kathmandu on Tuesday, said Diyesh Ratna Shakya, senior vice president of the Federation of Nepal Gold and Silver Traders.

He said that all jewellery shops in Kathmandu have remained closed since Thursday while the shops in other districts are partially closed as well. However, entire gold and silver shops across the country had been closed on Thursday and Friday.

Gold trader in Kathmandu Tej Ratna Shakya said that there will be hunger strike in Kathmandu from Wednesday if the government did not address the demand raised by the jewellery traders.

At a time when gold prices are skyrocketing and recession is looming, the new tax provision appears to be pushing the gold market further towards a great depression, he said.

He said that there is no alternative to withdrawing the decision of imposing tax on gold and customs on diamond to preserve the sector. Similarly, they have also demanded with the government to formulate a clear policy for the trade of gold and silver.