Govt tax hike escalates gold price in domestic market

Published On: June 2, 2024 09:30 AM NPT By: Republica | @RepublicaNepal

Although the bullion price pacifies in int’l market, increased customs duty from 15 pc to 20 pc takes toll on gold price in Nepal

KATHMANDU, June 2: At a time when the price of gold in the domestic market has been soaring due to international reasons, the increased customs duty imposed by the government has further affected the bullion price in Nepal.

Gold hit a record high price at Rs 142,200 per tola, with a single-day price hike of Rs 1,700 per tola (11.66 grams) on Friday. Overall, the price of the precious yellow metal increased Rs 5,300 per tola last week.

According to the Federation of Nepal Gold and Silver Dealers’ Associations (FENEGOSIDA), the price of gold was affected lately after the government increased the customs duty by 5 percent through the announcement of the budget for FY 2024/25. The budget talks about increasing the customs duty on gold to 20 percent from 15 percent. “Amid the prevailing higher price of gold in the international market, the increased customs duty has directly affected the gold price,” reads a press statement issued by the FENEGOSIDA.

In the first half of last week, the price of gold in the international market successively increased due to the weakening price of the US dollar and a decline in the US treasury yields. In the second half, the gold price however was moderated in the international market.

The price of the precious yellow metal has been breaking records in the international market for the past few months due to investors buying gold amid geopolitical uncertainty. According to international media reports, the price of gold has surged over 10 percent since January 2024.

According to the FENEGOSIDA, the demand for gold in the domestic market has declined sharply due to soaring prices of the yellow metal. As a result, the import has also declined over the period.

The records with the Department of Customs (DoC) show that the import of gold declined to 2,451 kg in the first 10 months of the current fiscal year from 2,566 kg in the same period in 2022/23.

With the rising price, the imports of gold however increased in value. According to the DoC, gold imports increased 11 percent to Rs 21.65 billion in the first 10 months of the current fiscal year, which ended in mid-May.

On the other hand, the price of silver increased by Rs 20 per tola last week. On Friday, it was traded at Rs 1,875 per tola, down from Rs 1,900 per tola on Thursday.