Dealers urge hike in import duty on gold

KATHMANDU, AUG 16 -

Gold dealers have urged the government to raise the customs duty on gold by at least Rs 800 per 10 gm. The demand came a day after India hiked the import tax on the yellow metal to discourage consumption.

The Federation of Nepal Gold and Silver Dealers Association (Fenegosida) said that the government must increase the duty on gold at the earliest to control possible smuggling to India. “The current tariff of Rs 3,600 per 10 gm has to be increased to Rs 4,400 which will make gold dearer here and discourage smuggling,” said Mani Ratna Shakya, president of Fenegosida.

India on Tuesday raised the customs duty on gold from 8 percent to 10 percent. With the tax increased in India, bullion traders say smuggling from Nepal to

India will increase. Shakya said that the

tax hike had made gold dearer in India which will encourage smuggling, thus aggravating the shortage in the local market where demand already outstrips supply due to import quotas.

Last month, the Central Investigation Bureau of the Nepal Police confiscated 35 kg of gold imported illegally from China. In June, the CIB arrested two smugglers and seized 5 kg of contraband gold brought from China. Gold dealers said that China had emerged as a source point for gold which is smuggled into Nepal and forwarded to its final destination India.

Last Friday, the Armed Police Force (APF) arrested two Indians along with 10 tolas (116.64 gm) of gold and 1.2 kg of silver ornaments from Jaleshwor in Mahottari district. Local dealers said that if the government is really serious about controlling smuggling, gold should be dearer by Rs 1,500 per tola in Nepal compared to the price in India.

Last month, the government increased the customs duty on gold by Rs 600 per

10 gm. Meanwhile, following pressure from dealers to increase the supply of gold , the government is working to increase the daily import quota from 15 kg to 20 kg. Shakya said that they had received assurances from Nepal Rastra Bank that both the customs duty and import quota would be increased.

The government has been maintaining a quota system to control excessive imports. In the last fiscal year, Nepal imported 5,807 kg of gold worth Rs 26 billion, according to the Ministry of Finance. Similarly, silver and diamonds worth Rs 8.78 billion and Rs 466 million respectively were imported last year.

Source: The Kathmandu Post