The government has issued a clarification on the luxury tax applied to gold and gold jewellery, providing clearer guidelines on its implementation following the Financial Act. While a 2% luxury tax remains in place for consumers, exemptions have been introduced for specific transactions.
According to the Cabinet’s decision, the 2% tax rate will continue to apply when consumers purchase jewellery from retailers. However, two types of transactions are now exempt:
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Business-to-business wholesale transactions
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Sales from consumers back to jewellers
Previously, the luxury tax was levied only on transactions above NPR 1 million, but starting this fiscal year, it applies to all jewellery purchases regardless of value. Under the clarification, the tax will now be charged only at the consumer purchase level, easing the burden on wholesalers and traders.
In addition, the government announced two further measures aimed at supporting domestic production and adjusting imports:
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A 35% reduction in excise duty on motorbikes manufactured locally.
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An increase in customs duty on the import of matchsticks to encourage domestic manufacturing.
