Gold Rs 3,600 per tola expensive than global price
KATHMANDU, Jan 27: The government decision to raise customs duty on gold has made the yellow metal expensive in the Nepali market by Rs 3,600 per tola (11.664 grams) compared to price in the international bullion market.
Before the revision, gold price difference between local and international market was Rs 2,750 per tola.
In a bid to control smuggling of gold to India, the government on Thursday raised customs duty on gold Rs 3,500 per tola from Rs 2,682 per tola. The government took the decision after India raised customs duty on gold to 6 percent from 4 percent effective from Monday.
Nepal Gold and Silver Dealers´ Association (Negosida) fixes the price of gold in the local market, calculating the value of US dollar against Nepali currency, import tax and profit margin for dealers.
"Though the government has increased customs duty to reduce price difference between Nepal and India, there is no guarantee that it will control gold smuggling from Nepal given the open borders,” said Tej Ratna Shakya, president of Negosida.
The fresh revision means Nepal´s customs duty on gold is Rs 120 per 10 grams more than the duty fixed by India.
Shakya said such a small duty difference would be simply insufficient to control gold smuggling to India which has been increasing in recent months due to shortage of Indian Currency (IC) in Nepali bordering towns. Smugglers sell gold to India to earn IC which they exchange in Nepal at inflated rates. Though official exchange rate of IRs 100 is Rs 160, IRs 100 fetches as much as Rs 168 in Nepali bordering towns.
“The government should have raised customs duty by at least Rs 1,000 per 10 grams. Higher price difference would have discouraged smugglers,” Shakya added.
Jewelers are facing shortage of yellow metal at a time when wedding demand is at its peak. According to dealers, they are getting only about 15 kg of gold from designated banks even though daily demand for gold hovers at around 40 kg.
Meanwhile, gold price remained unchanged at Rs 57800 per tola on Sunday even though its price in international bullion market fell by US$ 8 per troy ounce (31.10 grams) on Saturday. The yellow metal was traded at $1,660 per troy ounce in the international bullion market on Friday.
The price of silver, however, went down by Rs 15 per tola. On Sunday, silver was traded at Rs 1,110 per tola.