Gold and silver traders across Nepal have launched a nationwide protest demanding the removal of the government-imposed luxury tax on gold and a 13% VAT on diamonds.
The protest was organized jointly by the Federation of Nepal Gold and Silver Dealers’ Association, Federation of Nepal Gold Silver Gem and Jewellery Associations, and the Federation of Handicrafts Association of Nepal, according to Diyesh Ratna Shakya, Senior Vice President of the Federation of Nepal Gold and Silver Dealers’ Association.
On Thursday, jewelry shops nationwide—including those in Kathmandu—remained closed, with traders planning to continue the shutdown on Friday. The traders are calling for the elimination of the 2% luxury tax and 6% customs duty on gold, as well as the 13% VAT on diamonds.
The government recently announced plans to implement a 2% luxury tax on gold purchases starting from the fiscal year 2025/26, a move the traders strongly oppose.
Shakya explained to The Rising Nepal that the luxury tax creates a layered taxation system on gold sales, effectively pushing the tax burden beyond 2%. “Although the tax rate is 2%, customers end up paying an additional 6%, significantly increasing jewelry prices,” he said. This hike, he warned, will hurt both traders and consumers and urged the government to revoke the tax.
He also criticized the 13% VAT on diamonds and precious stones, which he says adds to the financial strain on consumers amid soaring gold prices and an economic slowdown. “These new tax provisions threaten to push the gold market towards a severe downturn,” he said.
The traders fear that rising prices due to taxes will drive illegal gold jewelry imports through Nepal’s open borders, undermining legitimate businesses. The tax changes could negatively impact the livelihoods of 25,000 businessmen, over 300,000 artisans and laborers, and about 1.5 million dependents across the country.
Currently, around 20,000 shops under the three federations are affected, though more than 23,000 jewelry shops are registered with the government’s tax authority (PAN).
Meanwhile, gold prices surged sharply on Thursday, rising by Rs. 1,600 per tola to reach Rs. 192,900, following a Rs. 1,300 increase the previous day. Silver prices, however, declined slightly by Rs. 15 per tola, settling at Rs. 2,150.
According to the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), the domestic price surge mirrors international trends, where gold climbed by USD 31 per ounce to USD 3,372 on Thursday.