Kathmandu, August 12

The government has urged the Goods and Services Tax (GST) Council of India to exempt the GST levied on the services that are procured by the Nepali traders.

Though the GST rules have defined ‘export of services’, when the payment for such service is received by the supplier in convertible foreign currency, Nepal has been requesting GST waiver in services while paying the supplier in Indian currency.

The request was made during the recent visit by senior Nepali officials to India, which was led by Joint Secretary at the Ministry of Commerce Ravi Shankar Sainju and comprised officials from the Ministry of Finance; Ministry of Law, Justice, Constituent Assembly and Parliamentary Affairs; Department of Customs and private sector representatives. They consulted with the authorities of the GST Council regarding exemption of GST in services that are consumed by Nepali traders.

Nepali traders pay in Indian currency while procuring services from India during imports and exports of goods to and from India. “We have discussed with the GST Council regarding this matter,” said Sainju. “GST Council is positive to issue notification to exempt GST in supply of services to the traders of Nepal and Bhutan while making payment to the service supplier in Indian currency as well.”

“GST is a destination-based tax, which is levied on consumption of goods or services. As Nepali traders are taking services in India, it should be taken as service export,” according to Sainju. Indian government has exempted all the taxes in export of goods, and for services, the supplier has to receive payment in convertible foreign currency.

Nepali traders have been procuring various services from India for third country trade. Services like transportation, insurance, shipping companies, container freight stations, and cargo handling, among others, have become costlier since India implemented GST on July 1.