Kathmandu, July 3

Import from India has plunged significantly since the southern neighbour enforced goods and services tax (GST) on Saturday, owing to confusion related to the refund mechanism under the new tax system.

Various customs offices along the southern border have reported to the Department of Customs that there has been no import from India since new tax rules came into force.

While the government of India has said that zero duty would be levied on exporters of goods and services, Indian suppliers have been left scratching their heads over how they would be reimbursed the duty paid on export goods, according to Pradeep Kumar Kedia, former president of the Birgunj Chamber of Commerce and Industries.

“Earlier, Indian suppliers used to get excise rebate on export goods once the Indian customs certified the goods had been exported,” Kedia, said. “A similar mechanism should be put in place so that the additional duty is not passed on to Nepali buyers.”

According to BCCI, traders at the border points, who import small volume of goods tooperate their shops, are anxious about the new tax system in India.

“Indian suppliers had informed their Nepali buyers that the latter’s import bills would likely go up after the implementation of GST,” said Kedia, adding the Indian government should provide clarity regarding duty refund procedures on exported goods.

“It seems the Indian suppliers are waiting to get their hands on the GST forms to understand the refund mechanism,” said Sishir Kumar Dhungana, the revenue secretary. “India is releasing only petroleum products from a few customs points at present.”

Import from the southern neighbour may take a hit for the next few days, while the Indian exporters start keeping their accounts as per the new tax rule, he said.

However, citing the significant volume of trade being carried out by the small and medium traders operating along the border points, BCCI has urged the government to sort out the issues related to GST at the earliest through bilateral talks with India.