KATHMANDU: Nepal has urged India to remove the service tax on ocean freight, saying it goes against the bilateral transit treaty.
Nepal has made a formal request to India to scrap a 4.5 per cent service tax on ocean freight costs which was imposed in accordance with a notice issued by the Revenue Department of India on January 12, the Kathmandu Post reported on Friday.
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Officials at the Nepal Embassy in New Delhi said they have asked the Indian government to remove the tax as soon as possible because it goes against the spirit of the transit treaty signed between the two countries.
Although the tax had been introduced for Indian importers, Nepali traders are having to pay it too as they fully rely on Indian clearing agents to handle shipments from third countries unloaded at Indian ports, the report said.
These agents have been passing on the additional charge to Nepali importers, making third-country imports shipped through Indian ports costlier.
Ocean freight costs vary depending on the distance of the port where the shipment originates. Ocean freight costs from China to Kolkata for a 20-foot container ranges from $600 to $1,600, according to Nepali importers.
