Gold and silver traders protest against new luxury tax and VAT increases

Gold and silver traders across Nepal are back on the streets, protesting against the government's new taxes on precious metals and related goods.

The protests, led by the Federation of Nepal Gold and Silver Gem and Jewellery Associations and the Nepal Gold and Silver Dealers’ Federation, are focused on several key demands. Traders want the government to cancel the new 2% luxury tax on gold, scrap the 13% VAT on diamonds and gemstones, and bring back the previous 6% customs duty on imported gold. They are also asking for clear and consistent policies to regulate the gold and silver trade.

The protests flared up again after Finance Minister and Deputy Prime Minister Bishnu Prasad Paudel defended the tax changes during a National Assembly session. He said the luxury tax was introduced to make gold transactions more transparent and help Nepal get off the Financial Action Task Force’s (FATF) grey list for financial risk. Paudel also claimed that the government didn’t introduce a new tax but simply removed the Rs 1 million threshold that used to exempt smaller gold purchases.

Traders weren’t satisfied with this explanation and resumed their protests on Thursday. They accused the government of putting too much pressure on the industry through the new budget.

Earlier, on June 19, traders had paused their protests after the government promised to address their concerns during the budget review. But since no action was taken, they say they had no choice but to protest again.

Under the new budget rules, all gold purchases—no matter the amount—are now taxed at 2%. Previously, only jewelry costing more than Rs 1 million was taxed. This new tax also applies to wholesalers and banks selling raw gold bars.

Traders say that when you add the 2% luxury tax to the 13% VAT and other fees, customers end up paying at least 6% more on gold jewelry, which is making it even harder for the jewelry business to survive.

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