Nepal asks India to remove service tax on ocean freight costs

Nepal has asked India to scrap a 4.5 per cent service tax on ocean freight costs, saying it goes against the spirit of the KEY transit treaty signed between the two countries.
The tax was imposed in accordance with a notice issued by the Revenue Department of India on January 12.
Officials at the Nepal Embassy in New Delhi said that they had asked the Indian authorities to remove the tax as soon as possible as it goes against the spirit of the transit treaty signed between the two countries.
"We have made a formal request to India, and they have assured us that they will address the issue as soon as possible," said Krishna Hari Pushkar, a senior diplomat at the Nepal Embassy in Delhi.

"Efforts were being made at multiple levels to resolve the problem."
Although the tax hadbeen introduced for Indian importers, Nepali traders are also required to pay it as they fully rely on Indian clearing agents to handle shipments from third countries unloaded at Indian ports, a leading English daily here said today.

These agents have been passing on the additional charge to Nepali importers, making third-country imports shipped through Indianports dearer.
Ocean freight costs vary depending on the distance of the port where the shipment originates.
Ocean freight costs from China to Kolkata for a 20-foot container range from USD 600-1,600, according to Nepali traders.

Since taxes are imposed on the freight costs, Nepal-bound goods unloaded at Indian ports have become dearer.
Nepalese Commerce Minister Romi Gauchan Thakali had also raised the issue with the Indian side during his recent visit to Delhi.