Kathmandu. KATHMANDU: Nepal Gem and Jewellery Association has demanded removal of Value Added Tax (VAT) on diamonds and precious stones. The association has demanded the removal of VAT, saying that the business of these goods has been ruined after the VAT was started from the budget of the current fiscal year.

“Diamonds and precious stones have become 12 percent more expensive in Nepal as compared to India due to VAT, due to which Nepali customers started going to the Indian market to buy these goods,” said Suman Man Tamrakar, president of the association, while inaugurating the 20th annual general meeting of the Association held in Kathmandu on Saturday. According to him, due to their small size, these goods can be easily smuggled in by unauthorized traders through the open border holes.

Presenting statistics, the import of diamonds has decreased by more than half compared to the previous year after the introduction of VAT, he said, “Although the government’s revenue from diamonds and precious stones has increased after the imposition of VAT, the livelihood of thousands of businessmen and millions of workers is at risk.” Indian businessmen and unauthorized businessmen are fattening, but domestic entrepreneurs are on the verge of fleeing. ’

He said that due to the 15 percent customs duty on gold in India and 20 percent in Nepal, customers go to India to buy jewelry.

He said that Nepal should attract Nepali customers by making the price of gold, diamonds and precious stone jewelry more expensive than India and creating space for unauthorized import of these items.

He said that when the price of gold is around Rs 300,000 per tola, the limit that can be paid through QR code in a day is not enough and it should be corrected accordingly. Tamrakar also said that the rule of filling up the customer’s KYC form while selling jewelry worth more than Rs 1 lakh in cash is also not relevant in the current context of gold being expensive.

According to him, the jewelry industry has been facing shortage of raw materials as the quota system implemented when the foreign exchange reserves have reached a record low. The association has demanded that the quota system for gold import should be scrapped and the private sector should be opened.

Tamrakar said that the limit of Rs 5 lakh to report to GOAML is not enough and it should be kept at Rs 10 lakh. Likewise, the association has demanded cash subsidy on the export of gold and silver, diamonds and jewelry and refund the duty paid on the import of jewelry by foreign citizens and non-resident Nepalis considering it as deemed export. Tamrakar also demanded that the jewellers should be allowed to open foreign currency accounts in banks to deposit the foreign currency earned through this means.

Member of the House of Representatives, Ganesh Parajuli, who participated as the chief guest in the inaugural session, responded to the issues raised by the representatives of the association and other private sector and suggested the government to come to the Industry, Commerce, Labour and Consumer Welfare Committee of the Parliament for discussion on the problems in gold, silver, diamonds and precious stones. He said that business-friendly policy could be prepared by holding detailed discussion among ministers, policy-making governments, parliamentarians and entrepreneurs in the committee. “The government is always ready to address the problems facing the private sector considering it as the driving force of economy,” he said.

Senior Vice President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Sur Krishna Vaidya, President of Confederation of Nepalese Industries (CNI) Birendra Raj Pandey, Vice President of Nepal Chamber of Commerce Dipak Shrestha and former Vice President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Jyotsna Shrestha pointed out that although the jewelry sector has contributed a lot to the economy, there are many policy and procedural problems and stressed on the need to resolve them.