The Union finance Ministry has removed the Goods and Services Tax on
services provided by Indian service providers for transit cargo such as transportation,
insurance, shipment, container freight station and cargo handling charges,
among others. The government has responded to request of Nepali traders who
handle transshipment operations in India using the Indian currency. They have
urged the Indian government to exempt them from payment of GST.
Issuing a notification, the Finance Ministry announced the GST waiver for
transit cargo considering these services provided by the Indian service
providers as ‘service export’.
A spokesman of the Commerce Ministry 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. “Now, Nepali traders making payments in Indian currency to
procure aforesaid services will not have to pay GST, which was levied by Indian
government since July 1.”
Since the Indian government introduced the GST, services like transportation,
cargo handling and container freight station had become 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
Nepal had requested the Indian government for GST waiver citing that
services procured by Nepali traders in India should be taken as service export.
The central bank of Nepal encourages traders to make payments in Indian
currency for transactions in India to prevent chances of embezzlement of
convertible foreign currency such as 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. 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, among others.