Nepal | May 21, 2019

Govt provides relief to traders hit hard by border blockade

Financial bill allows deduction of detention and demurrage costs while clearing last instalment of income tax for this fiscal year

Himalayan News Service
Birgunj dry port

File – Stranded containers being loaded at the dry port in Birgunj, amid the unofficial blockade imposed by India at the border point, on Thursay, October 29, 2015. Photo: Ram Sarraf

Kathmandu, May 30

Traders will be able to deduct the cost of detention and demurrage accrued during border blockade for income tax calculation purpose.

The Financial Bill 2016-17, which was tabled in the Parliament on Saturday, has allowed traders to deduct such costs while clearing the last instalment of income tax for this fiscal.

The government, through this provision, has provided some relief to the traders who had faced difficulties during the border blockade.

According to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) — the largest private sector umbrella body — traders have paid between Rs 3.5 billion to Rs four billion as detention, demurrage and parking fees due to the border blockade.

Due to the tensions at the southern border points, goods imported from third countries were stuck for long at Kolkata Port and bordering Indian towns. Consequently, the demurrage and detention charges of shipping liners, Indian transporters and parking fees of container freight stations in India had accumulated.

FNCCI had also been lobbying with shipping companies to waive the demurrage and detention charges. The Ministry of Foreign Affairs in Kathmandu had even written to the foreign diplomatic mission in the Capital to approach the shipping companies of their respective countries for the waiver of demurrage and detention charges. However, very few shipping liners have waived a certain per cent of demurrage charges.

“The latest provision in fiscal budget has given some relief to the traders,” said Rajan Sharma, chairman of Transit and Transport Committee of FNCCI.

Similarly, the fiscal budget has also provisioned to exclude demurrage and detention costs while calculating customs valuation of goods.

Normally, cost of goods, cost of insurance and cost of freight (CIF) value are taken into account while calculating the customs valuation of goods. As per the traders, demurrage and detention charges were not added in customs valuation of goods during the blockade. However, the existing customs law allows customs officer to include all the costs involved in importing goods for the customs valuation purpose.

“Now the provision in the financial bill has cleared the grey area where the customs officer could have used his discretion,” said Sharma.

Until the country concludes trans-shipment agreement with India, traders will be obliged to face problems like that of detention and demurrage during third country trade. Traders and freight forwarders have had to take the responsibility of the goods shipped for Nepal from Indian port in Kolkata. However, once the trans-shipment agreement with India is signed, traders will be able to receive the goods in the country’s own port.

 


A version of this article appears in print on May 31, 2016 of The Himalayan Times.


Follow The Himalayan Times on Twitter and Facebook

Recommended Stories: