Republica,18 Sep 2017
KATHMANDU: Revenue collection figure of all major trading points with India is lower than the target due to Goods and Services Tax (GST) of India which came into implementation from July 1.
This slowdown in customs duty collection is contrary to statements of government officials and some experts who had earlier said that the integrated tax system of India would bring positive results.
India has been charging GST of 0 to 28 percent on its products and services.
Revenue mobilization by major customs points has always surpassed the target set by the government.
Government officials as well as experts had said that imposition of GST would control under-invoicing at customs points and also bring down informal trade with the southern neighbor, which is estimated at one-third of formal trade, through the porous border.
India accounts for more than two-thirds of Nepal's foreign trade. Data collected by Republica from all major customs points along the southern border with India, including Birgunj, Biratnagar and Bhairahawa, shows dismal revenue mobilization by the customs offices.
Birgunj Customs Office, the largest customs point along Nepal-India border, collected Rs 8.52 billion, or 91.87 percent of the target set, in the first month of the current fiscal year (mid-July to mid-Aug), against the target of Rs 9.27 billion. The office could mobilize only 71 percent of the target in the second month of 2017/18 (mid-Aug to mid-Sept). It mobilized Rs 7.68 billion in the second month of FY 2017/18 against the target of Rs 10.75 billion.
Likewise, Bhairahawa Customs Office could collect 91 percent and 86 percent of the targets in the first and second months of FY 2017/18. The office collected Rs 5.21 million against the target of Rs 5.7 billion in the first month, and Rs 5.58 billion against the target of Rs 6.51 billion.
Similarly, Biratnagar Customs Office also missed revenue targets in the first two months of FY 2017/18. It could collect only 77 percent and 62 percent of the targeted Rs 2.18 billion and Rs 1.56 billion in the first and second months, respectively.
Customs officials have attributed slowdown in revenue mobilization to floods in Tarai districts and lower trade activity due to disturbances in some customs points. Revenue Secretary Shishir Kumar Dhungana maintained that GST is not the major factor behind low revenue mobilization in the first two months of 2017/18. “Flood in Tarai belt and disturbances in some customs points are the reasons behind low revenue mobilization,” Dhungana said.
Chief of Birgunj Customs Office, Shebantak Pokharel, also said that GST is not the reason behind low revenue collection.
Floods in Tarai district has affected trade through several Tarai districts. Similarly, revenue collection from the eastern region was affected due to damage in a railway bridge in India, which required goods headed to Biratnagar Customs Office to be rerouted through Bhimnagar and Bhantabari, according to Krishna Basnet, chief of Biratnagar Customs Office.
(With inputs from Ajit Tiwari from Biratnagar, Ritesh Tripathi from Birgunj and Rekha Bhusal from Bhairahawa)