Jewelry shops in Kathmandu shut down

Kathmandu – Jewelry shops across Kathmandu remained closed on Thursday, June 12, as jewelers staged a protest against the government’s newly introduced tax policies. The demonstration follows the announcement of Nepal’s federal budget on May 29, which unveiled significant changes in the taxation of the jewelry sector.

Under the new rules, a 2% luxury tax now applies to all types of jewelry, regardless of value. Additionally, diamond- and gemstone-studded ornaments are subject to a 13% Value Added Tax (VAT). These changes mark a departure from the previous system, where a 10% luxury tax was levied only on jewelry priced above Rs 1 million.

The protesting jewelers argue that these blanket taxes will severely impact their businesses and discourage customers from purchasing jewelry, especially smaller and mid-range items. They are calling on the government to revoke the newly imposed taxes and implement more balanced and transparent policies for the gold and silver trade.

Among their key demands is a fixed 6% customs duty on gold imports, which they believe would bring stability and predictability to the industry. Currently, the sector is grappling with inconsistent policies, and the new taxes have added further uncertainty.

In a related move in November 2024, the government had reduced the customs duty on gold imports from 20% to 10%. However, jewelers claim this benefit is being overshadowed by the newer, heavier taxes introduced in the 2025/26 budget.

With the protest drawing attention to the discontent in the jewelry sector, stakeholders are urging the government to reconsider the tax measures and engage in dialogue to support both revenue generation and business sustainability.