Friday, January 25, 2013

Cabinet hikes gold import duty to Rs 3,000 per 10 gram

The cabinet today hiked customs duty on gold import by Rs 700 per 10 gram to Rs 3,000 per 10 gram – with immediate effect – to control smuggling of the precious yellow metal to India.
The new hike makes gold import duty Rs 120 higher in Nepal than in India that has on Monday hiked the tax to Rs 1,800 Indian currency (IC), Rs 2,880 per 10 gram.
Recently, the gold smuggling has seen a dramatic rise from China to India via Nepal due to the duty difference and rising informal trade between Nepal and India. Some traders in Nepal are suspected to pay their under invoiced goods from India in gold smuggled from China. In this way they can have double benefit, they will not have shortage of IC and can take advantage of duty difference and churn profit. 
Likewise, whenever the price of bullion is higher in India, smuggling to India increases due to higher income and accumulation of the IC that the
central bank has tighten due to black market of IC in bordering towns at around Rs 168, which is higher than that fixed by the Nepal Rastra Bank.
However, today’s hike also could not stop the smuggling, according to the bullion traders.
“The difference of Rs 120 per 10 gm could not stop smuggling due to rising  IC shortage,” according to former president of Nepal Gold and Silver Dealers Association Tej Ratna Shakya. “The difference must be at least Rs 1,000 per 10 gm to stop smuggling to
the southern neighbour.”

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