India has revised the GST in three new levels (5, 18 and 40 percent) with effect from September 22.
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According to the decision of the recently concluded 56th Goods and Services Tax (GST) Council, India has decided to reduce the tax rate on materials directly related to consumers, including daily consumables and agricultural products, and the Morang Udyog Trade Association has warned that it will have an adverse effect on Nepal.
India has revised the GST to three new levels (5, 18 and 40 percent) with effect from September 22. The association has issued a statement and said that after the tax cut in India, the goods there will become cheaper and Nepali consumers will be attracted to the cross-border market. The conclusion of the association is that this will increase theft-immigration, weaken the border market, affect the domestic industry and reduce the revenue collection.
'When the illegal transactions of more than 30,000 crores annually through the open border cannot be controlled, the problem will become worse after the implementation of India's revised tax system,' the statement issued by the association said. According to the association, for a long-term solution, it is necessary for Nepal to take India's tax rate into consideration while determining its tax rates.
The association has also submitted four points of suggestions pointing out the need for the government of Nepal to improve the tax policy immediately. Among them, it is proposed to implement low tax on essential goods, medium tax on middle class goods and high tax rate on luxury goods, reduce internal duties and customs duties on daily consumer goods, give concessions to domestic industry through tax exemptions and subsidies and fully implement the recommendations of the High Level Economic Reforms Suggestion Commission .
