FENEGOSIDA objects to new tax measures on gold, silver and diamond jewellery in budget

KATHMANDU: Federation of Nepal Gold and Silver Dealers' Association (FENEGOSIDA) has expressed a mixed reaction to the additional arrangements concerning business of gold, silver and diamond‑studded jewellery outlined in budget for upcoming fiscal year 2025/26.

The association has welcomed the arrangement regarding Jhitigunta – the quota of gold and gold jewellery that Nepali citizens returning from foreign employment may bring into the country.

FENEGOSIDA said the commitment to provide bonded warehouse facilities for export‑oriented industries and arrangements to supply necessary gold and silver upon 50% advance payment is positive. The association expressed gratitude to the government for these measures but objected to the 2% luxury tax – now applied to all jewellery and not just items above Rs 1 million – and 13% VAT on diamond and precious stone‑studded jewellery.

FENEGOSIDA asserted that gold and silver jewellery in Nepal are not luxury items but form an integral part of the nation's culture and act as a recognised means of savings and investment used throughout life. It warned that new tax structure, which adds a direct financial burden of between 2% and 13% on consumers, will increase inflation and may encourage smuggling and illegal transactions given the high prices compared with those in neighbouring countries.

The association added that, with a mandatory buy‑back guarantee in the trade, the gap between selling and buying prices must be minimal to maintain market stability. It warned that increased tax, in an already recessionary market, is likely to deepen the downturn and threaten livelihoods of hundreds of thousands of businesspeople, artisans and labourers.

FENEGOSIDA has urged the government to immediately reconsider and abolish luxury tax on all gold and gold jewellery, as well as VAT on diamond‑studded jewellery. It called for new acts, rules and policies to be formulated to support long‑term development of gold and silver trade and for a detailed study of effects on businesses, employment and the market to be conducted before any changes to the tax structure are made.

The association also urged the establishment of an internationally recognised, accredited laboratory for quality certification in line with global standards and highlighted that small quantities of gold jewellery cannot be exported because banks do not supply 100 grams or 200 grams of gold to small industries, as per the circular issued by Nepal Rastra Bank. The association further demanded that 2.5% TDS on exports be abolished.