GST impact: Nepal fears major hit on bilateral trade with India

Nepal's exports to India can attract higher taxes post GST

Expressing concern that the revolutionary Goods and Services Tax (GST) regime adopted by India will adversely impact trade and transit between Kathmandu and New Delhi, land-locked Nepal - majorly dependent on bilateral trade with India has sought guarantees that the new tax system does not impinge upon existing treaties and accords in this regard.

The Nepali Commerce Ministry said on Monday that it has written to India through the diplomatic channel urging that the GST regime should not impinge upon trade and transit treaties between the two countries.

"Considering the possible impact on Nepal's trade with India following the implementation of the GST, we wrote to the Indian authorities to ensure that the new tax system should not infringe on bilateral trade," Rabi Shankar Sainju, Joint Secretary at Nepal's Ministry of Commerce, told Xinhua news agency.

The introduction of the pan-India GST regime from July 1 has given rise to apprehensions here that Nepal's exports to India could henceforth attract higher taxes.

"After sending the first letter about two months ago, we have also sent another reminder letter about three weeks ago," Sainju said.

Nepal government officials said their economy was bound to be affected by India's new tax system as two-thirds of Nepal's international trade takes place with India alone.