India removes GST on supply of services for transit cargo

India has removed the goods and services tax on services provided by Indian service providers for transit cargo like transportation, insurance, shipment, container freight station and cargo handling charges.
Indian Finance Ministry – issuing a notification – informed about the GST waiver considering these services provided by the Indian service providers as ‘service export’.
Joint secretary at the Commerce Ministry Rabi Shanker Sainju confirmed that India has waived the GST on supply of services associated with transit cargo to Nepal and Bhutan – landlocked countries – through a recently published Gazette notice.
The new provision introduced by government of India had come into force from September 29. "Nepali traders making payments in Indian currency to procure aforesaid services will not have to pay GST now," he said, adding that Indian government had earlier levied GST since July 1.
Since the Indian government introduced the GST, services like transportation, cargo handling and container freight station had became costlier as the GST rule recognised and exempted GST only, if the service procurer made payment in convertible foreign currency. Though GST is not applicable on export of goods and services, it recognised service export only if the Indian supplier received payment in convertible foreign currency.
Nepal had requested the Indian government for GST waiver citing that services procured by Nepali traders in India should be taken as service export. Likewise, Nepali private sector – during the Prime Minister Sher Bahadur Deuba's India visit – had also requested the Indian authorities to waive the GST on Indian service providers for transit cargo like transportation, insurance, shipment, container freight station and cargo handling charges as it is against the Nepal-India Bilateral Trade and Transit Agreement. The Indian government officials, especially then Commerce Minister Nirmala Sitharaman – currently Defence Minister – had with Nepali private sector vowed to waive GST, if it is against the bilateral agreement.
The central bank encourages traders to make payments in Indian currency for transactions in India to prevent chances of embezzlement of convertible foreign currency like US dollar by Nepali traders.
Nepal has requested GST waiver for all services procured by Nepalis in India, like software, business process outsourcing, knowledge process outsourcing and other technical services as well, according to Sainju. "However, India has amended GST rules only for services related to transit cargo that includes road and rail transportation, shipping line charges, cargo handling charges."

Nepal-India investment summit in October

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) is planning to hold Nepal-India investment summit in October this year to attract Indian investment in Nepal.
Publishing the achievements of the first 100 days of the newly elected FNCCI executive committee today, FNCCI president Bhawani Rana said the summit will be held towards mid-October. The summit, which will be organised in Kathmandu, aims to attract Indian investment in Nepal.
She said that the the newly elected executive committee has started its tenure with four major agenda including administrative reform and institutional development of FNCCI, policy lobbying and intervention, economic diplomacy and international trade and capacity building of private sector and FNCCI members through innovative programmes.
"For the administrative reform, FNCCI has formed an expert committee," she said, adding that the committee has already submitted its report, now it will be implemented soon. The private sector umbrella organisation is also planning to adopt more technology-friendly measures. "We also have started the process to construct a separate building for commodity council," she added.
Rana also informed that FNCCI is focusing on consolidating trade exchanges and economic diplomacy with other countries. Informing that the elections of provincial chambers of commerce and industry have already been completed in six provinces, she said that the remaining one will also be completed soon.
She also informed that during the first 100 days, the new executive committee worked on issues related to employment, reconstruction, and women entrepreneurship; and signed an agreement with Industry Ministry for a five-year project on rural enterprises and remittance.
Addressing the press meet, senior vice-president of FNCCI, Shekhar Golchha said that FNCCI is preparing for the management of provincial chambers of commerce and industry.
Talking about the Goods and Services Tax (GST) recently introduced in India, he said that there is a lot of confusion about it not only in Nepal but even in India. He, however, claimed that the GST will promote fair trade and discourage illegal imports. GST was implemented in India on July 1 this year.
Likewise, FNCCI announced that it would be organising a cross border trade and tourism expo jointly with the government of West Bengal on August 28. It also said that it will establish Nepal-India investment promotion cell in order to strengthen trade and tourism of the country. FNCCI is also planning to launch ‘women in business’ programme, FNCCI president cup T20 cricket, among other initiatives.