GST triggers slowdown in revenue collection

Published On: August 29, 2017 02:24 AM NPT By: Raju Adhikari

JHAPA, August 29: Revenue collection at Kakarvitta custom point in the eastern Nepal border has dropped as traders have tried to evade tax after the Goods and Services Tax (GST) came into effect in India. 

Import of goods through Kakarvitta has gone down after July 1, affecting the earning of the custom office. The revenue collection target was Rs 644 million but the achievement has been lower than ten percent. Only Rs 56 million has been collected in revenue in the month mid-July to mid-August. GST came into effect in India from July 1.

Traders from both countries have colluded to evade tax, leading to a drop in official imports as goods are now coming through illegal channels. 

Officials of Mechi Customs Office, Kakarvitta, stated that the import of goods has plunged. According to Ganapati Kandel, chief of sub-customs office at Bhadrapur under Mechi Customs Office, said that GST has seemingly affected import of goods. 

The officials, however, do not agree that there is illegal import. According to Kandel, GST has made importers hesitant though the customs officials have asked both the importers and exporters to compulsorily acquire Exim code, which is required to import and export after GST implementation. Kandel said that GST was the only reason behind the slowdown of import.

"After the imposition of GST, traders have chosen to carry out trade through informal channels in order to evade tax," said a garment trader seeking anonymity. 

"Indian traders have also played a role to evade taxes in their side," the trader claimed: "They do not want to be registered in GST, and trade through illegal means." 

According to traders, now the imports from India are more than the normal times due to upcoming festive season in Nepal. It is the season when goods are imported in large quantities from India.

But the import statistics at the Mechi Customs Office show otherwise. The claim of customs office that traders have opted sub-customs office for import is not applicable in Jhapa customs point. 

The Mechi Customs Office used to collect daily revenue of Rs 150 million in average, with both import and export revenues added. But after the imposition of GST, imports have dropped. 

Not only big traders but the retailers who import small quantities of goods in cycles and bicycles and pay less taxes, are also taking the illegal way. 

"Hundreds of bicycles and motorcycles used to bring in goods from Panitanki on the other side of the border," an official at the Kakarvitta customs point said: "Now the cycles and motorcycles no longer come this way. They use illegal routes."

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