Hike in Import Duty of Gold

The cabinet meetings have decided to hike the import duty on the precious yellow metal by Rs. 800. The main reason to hike the duty is to control the illegal outflow of gold to India. India had hiked the import duty of Gold from 2% to 4 % on March 2012, due to which there was the difference in the gold price between the two neighboring nation. The difference in import duty has made Gold cheaper in Nepal compared to India. Thus to take benefit from the price difference gold is being smuggled to India, draining the supply in the local market and creating more scarcity. Nepal Gold and Silver Dealers Association has also requested government to hike the import duty to curb smuggling so that the Nepalese market can overcome the scarcity for the precious metal. In fiscal year 2009-10 due to the import of large quantities of gold and silver, Nepal suffered through a huge deficit balance of payments. The government suspected that the imported precious metals were being smuggled to India. To control such problem government determined the import quota for gold and also allowed only the commercial banks to import gold. Currently in Nepal, commercial banks can only import 20 kg of gold daily and sell it to traders. Following the Indian governments move to increase customs duty for precious metals in early February, the Nepali government also revised the customs duty on gold and silver fearing that gold would again be smuggled to India due to the difference in customs duty. The table below shows the import duty of gold during last three years:

Import Duty Hike for Gold

Date 2066 Chaitra 2066 Chaitra 2067 Magshir 2068 Magh 2069 Baisakh Increased Rate (10gm / Rupee) 130 470 1000 1500 2300