KATHMANDU, Nov 11: The government increased customs duty on gold by Rs 2,000 per tola (11.664 grams) from Sunday.
The decision means gold imported Sunday onward will be dearer by Rs 2,000 per tola. However, price of gold increased by Rs 1,100 per tola on Sunday itself.
According to Federation of Nepal Gold and Silver Dealers' Association (FENEGOSIDA), the yellow metal was traded for Rs 71,000 per tola on Sunday. Gold was traded at Rs 69,900 per tola on Saturday.
Talking to Republica, Mani Ratna Shakya, immediate past president of the federation, said that the cabinet meeting decided to increase customs duty on gold imports last week. "The decision officially came into effect from Sunday," he said.
The government, through the budget speech for Fiscal Year 2019/20, had increase customs duty on gold to Rs 5,000 per 10 grams, up Rs 4,300 per 10 gram in the FY 2017/18. With the fresh hike, the customs duty on gold has now reached Rs 6,500 per 10 grams.
Although the price of gold is falling in the international market, price increased by Rs 1,100 per tola in a single day on Sunday. In the international market, gold was traded at US$ 1,459 per troy ounce on Sunday, down from Friday's $1,462 per ounce.
"The price was supposed to go by Rs 1,500 per tola in the domestic market on Sunday," Shakya told Republica. "This has nothing to do with international price movement. This is due to our internal affairs like changes in customs duty.”
According to Shakya, gold is cheaper in the Nepali market compared to India. "As the two countries share open border, hike in customs duty was needed to prevent smuggling of gold to India," Shakya added.
India has been levying 12% customs duty on gold. With the fresh hike, the customs duty on gold imports in Nepal has reached 13%.
Nepal Rastra Bank (NRB) allows commercial banks to import 20 kg of gold per day. Commercial banks distribute gold to dealers. According to the central bank, Nepal imported gold worth Rs 31.6 million in the first two months of FY 2019/20. It imported gold worth Rs 34.63 billion in FY 2018/19, up from Rs 32.20 billion in FY2017/18.