In the budget presented on Monday before the Federal Parliament, Finance Minister Prakash SharanMahat announced the introduction of a 2% luxury tax on precious metals. As per the government of Nepal services offered by high-end hotels and resorts, imported liquors and precious metals are luxury goods.

The Dealers of Gold and Silver organized the protest on Thursday demanding the withdrawal of luxury tax on gold and 13% VAT on Diamonds. On Monday, the protest intensified further as gold and silver dealers closed their shops and took to the streets in demonstration. The Federation of Nepal Gold and Silver Dealers' Association, the Federation of Nepal Gold Silver Gem and Jewelry Associations, and the Federation of Handicrafts Association of Nepal have been jointly organizing a nationwide protest to remove the luxury tax on gold, silver, gems and stone as it comes under cultural necessity not luxury of a person.

Can policy ignore the cultural role of gold and silver in Nepal?

In Nepali life, gold and silver are part of every major event. From birth to death, they hold special meaning in rituals and traditions. Weddings in Nepal wouldn’t feel complete without giving and receiving gold jewelry. It's a tradition that’s not just about culture, but also seen as a form of financial security.Mothers pass down family jewelry, silver is used in religious rituals, and gold is seen as protection for daughters starting married life. These traditions are common across all families, rich or poor, which makes gold and silver a key part of Nepali culture.

Some people say Nepalese use too much gold and silver to show off, pointing to big dowries, bridal contests online, and more gold bought during festivals. They think the government should limit imports and add taxes.But many believe gold and silver are important parts of Nepali culture with strong religious and family meaning. Calling them just “luxuries” ignores their true value and hurts many who rely on them for tradition and income.

Gold and silver are more than just shiny objects in Nepal; they are part of the country’s shared identity. Seeing them only as luxury items ignores their importance in tradition, safety, and the informal economy.Nepal faces the challenge of balancing cultural traditions with modern economic needs, finding a way to respect both heritage and fairness.

How important is the jewelry market to Nepal’s economy?

The jewelry sector in Nepal plays a significant role to build the nations economy. Nepal's jewelry market has been growing steadily because more people are buying jewelry and styles are changing. Higher incomes, strong cultural ties to gold and silver, and growing cities have helped this growth.  As published by the Jewelry Nepal the revenue generated in the Jewelry market is projected to reach US$218.32m in 2025.

This market is expected to experience an annual growth rate of 6.7% (CAGR 2025-2021). The data presented by the 6Wresearch is tabled below:-

There's a significant price difference of gold between Nepal and neighboring country India.  Due to India's decision to reduce its customs duty on gold from 15% to 6% in July 2024, the price gap between the two countries has widened dramatically.India is the world’s second-largest gold consumer after China, which raises questions about Nepal’s decision to increase taxes on gold and precious stones by calling it a luxury item.

The big price gap between gold in Nepal and India, caused by high taxes, has led to illegal gold smuggling. Nepal needs 15 to 18 tonnes of gold each year, and about 5 to 6 tonnes are smuggled from India. With Nepal’s gold tax at 20% and India’s at just 6%, smuggling has become more profitable. The new luxury tax could make things worse by increasing the price difference even more.

The big price gap between gold in Nepal and India, caused by high taxes, has led to illegal gold smuggling. Nepal needs 15 to 18 tonnes of gold each year, and about 5 to 6 tonnes are smuggled from India. With Nepal’s gold tax at 20% and India’s at just 6%, smuggling has become more profitable. The new luxury tax could make things worse by increasing the price difference even more.

Also Gold being the key part of Nepalese tradition, if its rate increases in the market it will be difficult for people to follow their customs and people might choose not to buy gold during marriage ceremony and other traditional events. People will not use as a form of savings or investment due to lower return after tax.

Nepali tradition does not wear gold to flaunt wealth, but to honor faith, family, and future and that deserves respect, not restriction.

By Benju Ghimire