Nepal's Commerce Ministry has said it has sent a letter to India through the diplomatic channel that the Goods and Services Tax (GST) implemented in India from July 1 should not infringe on trade and transit treaties between the two countries.
With India incorporating state tax under GST, there is possibility that Nepali exports could be levied higher taxes.
"Considering the possible impact on Nepal's trade with India and third country following the implementation of GST in India, we wrote to the Indian authority to ensure that the new tax system in India should not infringe on bilateral trade and transit agreements," Rabi Shankar Sainju, joint secretary at Nepal's Ministry of Commerce, told Xinhua on Monday.
"After sending first letter about two months ago, we have also sent another reminder letter about three weeks ago."
Nepalese government officials admit that the country's economy is bound to be affected by India's new tax system as the country's two third of international trade take place with India only.
Nepal has initiated a move to study its impact on its economy.
(ASIA PACIFIC DAILY)