Govt told to raise import duty on gold

KATHMANDU, June 8, 2013

Gold traders have requested the government to raise import duty on gold.

They made such a request arguing that duty hike on gold in India would spur smuggling of yellow to the southern neighbor at a time when the local market is facing shortage of gold.

India on Wednesday hiked gold import duty from 6 percent to 8 percent to curb its current account deficit.

“At a time when the domestic market is facing gold shortage, the recent duty hike in India might increase gold smuggling to India,” Mani Ratna Shakya, president of Federation of Nepal Gold and Silver Dealers´ Associations, told Republica. “Hence, we have requested the government to hike the duty as soon as possible.”

If customs duty on gold is raised in line with India, the yellow metal will be dearer in the domestic market by around Rs 1,000 per 10 grams. But traders have requested the government to increase the import duty by at least Rs 1,500 per 10 grams to prevent smuggling of gold to India.

“If the government does not raise duty immediately, the duty hike in India, which has made gold expensive there compared to the local market, will encourage smugglers to illegally export the yellow metal to India to get Indian currency which is selling at higher rates in black market,” Shakya added.

Shakya told Republica that the federation has already raised the issue before the Governor of Nepal Rastra Bank - the central bank. “The Governor has assured us that he would look into the issue and do the needful,” he added.

Bullion traders have demanded that the government take the decision on the issue at the earliest.

The government has been levying customs duty of Rs 3,000 per 10 grams on gold. It had raised duty on January 24 by Rs 700 per 10 grams after the southern neighbor increased duty on refined gold to IRs 2,880 per 10 grams.

Source: Republica