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Federation of Nepal Chamber of Commerce and Industry has requested the government to review the luxury tax and value added tax (VAT) imposed through the budget of the financial year 2082/83.
The government has imposed a 2 percent luxury tax on gold and gold jewelry and a 13 percent value added tax (VAT) on precious stones including diamonds through the 2082/83 budget. The federation demanded the government to review the said tax as unreasonable.
Federation President Chandra Prasad Dhakal and delegations of Nepal Gold and Silver Gems and Jewelery Federation, Nepal Gold and Silver Traders Federation and Gems and Jewelery Association had a discussion on this matter at the federation secretariat on Sunday.
Regarding the luxury tax imposed on gold and the value added tax (VAT) imposed on precious stones including diamonds, the federation has already announced the formal opinion that these tax provisions will affect business and employment in response to the budget.
Nepal Gold and Silver Gems and Jewelery Federation, Gems and Jewelery Association and Nepal Gold and Silver Traders Federation have been demanding a review saying that these tax provisions will ruin the business. The representatives of all the three organizations requested the Federation of Industries and Commerce to take the necessary initiative in this matter . Dhakal, the president of the
federation, said that the issues raised by the businessmen are relevant and that necessary initiatives will be taken on behalf of the federation. He said that this issue raised by the businessmen is related to the general consumer and employment. It seems that the proposed tax policy will have a serious impact on businessmen and general consumers. The federation will take necessary initiatives with the government for VAT review, he said.
Sumanman Tamrakar, Chairman of Kisan Sunar, Gems and Jewelery Association, President of Nepal Gold and Silver Gems and Jewelery Federation and Diyesharatna Shakya, Acting President of Nepal Gold and Silver Traders Federation, said that the proposed tax provisions on gold, silver, diamonds, gems and handicrafts business will seriously affect businessmen and general consumers .
The 2 percent luxury tax proposed in the budget will lead to a multi-tax system (round tripping) in gold transactions and force consumers to pay up to 6 percent more, according to the president of the Nepal Gold and Silver Ratna and Jewelery Federation, Kisan Sunar and the Nepal Gold and Silver Traders Federation. Both federations are of the opinion that this will lead to a recession in the gold market, hinder the buyback system and reduce consumer confidence.
The 13 percent VAT imposed on diamonds and precious stones will increase the price of gold jewelry by an additional 19 percent. Businessmen claim that this will increase the price of jewelry, encourage illegal imports, put a serious financial burden on common consumers, and affect the livelihood of 25,000 businessmen and more than 1.5 million artisans and workers.
Both federations have put demands on the government to cancel the 2 percent luxury tax on gold and gold jewelry, cancel the 13 percent VAT on diamonds and jewelry, and create long-term laws, rules, and policies to encourage gold and silver business .
Similarly, before changing the tax structure, the impact on business and employment should be studied in detail, the customs rate should be maintained at 6 percent like neighboring India, an internationally recognized laboratory should be established for quality certification, and the 2.5 percent TDS levied on export shipments should be abolished .
