The government has once again hiked the import duty on gold in a bid to control smuggling of the yellow metal to India.
A Cabinet meeting on Thursday decided to increase the duty by Rs 800 per 10 grams to Rs 2300. The government had last hiked the tax in February—from Rs 1,000 per 10 grams to Rs 1,500.
This is the fourth time in two years that the duty has been jacked up. Two years ago, the duty was at Rs 130 per 10 grams.
The fresh hike in gold import duty is expected to send the price of the precious metal soaring. Gold was traded at Rs 47,495 per 10 grams on Thursday. “The latest duty increment will push the gold price higher,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealer’s Association (Negosida), which determines the gold price in the local market.
After India hiked gold import duty by two folds in mid-March, there was a surge in smuggling of gold from Nepal to India. Traders had been complaining that the difference between duties in Nepal and India encouraged gold smuggling to the southern neighbour, leading to a shortage here.
Gold smuggling is also related to the illicit trade of the Indian Currency (IC) prevailing in bordering areas. Black marketers sell the IC—earned from selling gold in India—at high exchange rates in bordering areas. This is one of the major reasons behind increased gold smuggling, according to traders. “The latest government decision will address gold shortage in domestic market,” said Shakya.
The government has maintained a quantitative restriction on gold import since 2010 after massive imports led to a negative balance of payments. The gold import quota is presently 20 kg daily. Gold traders say as the import duty in Nepal was lower than that in India, half of the 20kg gold was being smuggled to the southern neighbour.
Each time India raises the customs duty on gold imports, Nepal faces pressure to adjust the duty here to control smuggling.
Source: Kantipur
A Cabinet meeting on Thursday decided to increase the duty by Rs 800 per 10 grams to Rs 2300. The government had last hiked the tax in February—from Rs 1,000 per 10 grams to Rs 1,500.
This is the fourth time in two years that the duty has been jacked up. Two years ago, the duty was at Rs 130 per 10 grams.
The fresh hike in gold import duty is expected to send the price of the precious metal soaring. Gold was traded at Rs 47,495 per 10 grams on Thursday. “The latest duty increment will push the gold price higher,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealer’s Association (Negosida), which determines the gold price in the local market.
After India hiked gold import duty by two folds in mid-March, there was a surge in smuggling of gold from Nepal to India. Traders had been complaining that the difference between duties in Nepal and India encouraged gold smuggling to the southern neighbour, leading to a shortage here.
Gold smuggling is also related to the illicit trade of the Indian Currency (IC) prevailing in bordering areas. Black marketers sell the IC—earned from selling gold in India—at high exchange rates in bordering areas. This is one of the major reasons behind increased gold smuggling, according to traders. “The latest government decision will address gold shortage in domestic market,” said Shakya.
The government has maintained a quantitative restriction on gold import since 2010 after massive imports led to a negative balance of payments. The gold import quota is presently 20 kg daily. Gold traders say as the import duty in Nepal was lower than that in India, half of the 20kg gold was being smuggled to the southern neighbour.
Each time India raises the customs duty on gold imports, Nepal faces pressure to adjust the duty here to control smuggling.
Source: Kantipur
No comments:
Post a Comment