'Govt encouraging imports of rice, oil and pulses'
KATHMANDU, June 1: With the government decision to increase customs duty on mustard seeds to 5 percent from 1 percent, the price of mustard oil is likely to increase by Rs 15 per liter.
In its Financial Bill that came along with the government's budget for the upcoming fiscal year 2018/19, the Ministry of Finance has decided to scrap the provision of 40 percent Value Added Tax (VAT) waiver on mustard oil is also going to add financial burden on consumers.
The Association of Nepali Rice, Oil and Pulse Industries (ANROPI) has expressed its concern over the government's decision to raise tax.
“We do not oppose the government policy that came through the budget. However, our only concern is that increasing customs duty on import of mustard seeds by 400 percent and scrapping VAT waiver facility will increase the cost of the popular cooking oil,” Sandip Kumar Agrawal told Republica.
The association fears the decision could encourage smuggling of mustard oil.
“The government's decision to raise customs duty and scrap VAT waiver facility on import of mustard seeds will not only increase the price of mustard oil, but could also encourage smuggling of mustard oil from India where the Goods and Sales Tax is 5 percent,” the association said in the statement.
“As India is self-dependent on oil and tax rate there is only 5 percent, there is the possibility of mustard oil smuggling to Nepal. It will cause revenue loss for the government.”
Similarly, the government decision to increase customs duty on unprocessed pulses and lentils to 10 percent from 5 percent will also affect domestic pulse industries, according to the association.
The government, however, has kept the customs duty on processed pulses unchanged at 10 percent.
“There should be two types of rates on processed and unprocessed pulses. But, the equal rates is going to promote import of the product rather than encouraging domestic pulse industries,” said Agrawal.
The association says that domestic producers are dissatisfied with the government for not imposing 15 percent duty on rice imports as demanded. “Increasing import of rice has a damaging effect on domestic rice industries. However, the government didn't heed our demand to impose 15 percent customs duty on rice,” read the association's statement. “The government has also not made any efforts to discourage rice imports.”
Nepal imports nearly Rs 2.5 billion worth of rice every month, according to conservative estimates.