Tuesday, 23 July, 2024

New import provisions shrink customs revenue


By Our Correspondent
Bhairahawa, Feb. 27: The revenue collected from customs has started decreasing due to the new provision implemented by Nepal Rastra Bank (NRB) to control imports.
The central bank has made a provision to keep 100 per cent cash margin when opening LC (letter of credit) to import 18 types of harmonic codes related to luxurious goods and 50 per cent cash margin while importing two types of harmonic codes.

According to the Bhairahawa Customs Office, the revenue collection has been steadily declining since December 20, 2021 due to this provision. According to the Office, the revenue target was not met in the months of Poush and Magh.
Before the new provision was implemented, the Customs Office had collected more revenue than the target.

The Office had collected revenue of 105.58 per cent in Shrawan, 109.59 per cent in Bhadra, 112.80 per cent in Ashoj, 103.69 per cent in Kartik and 101.08 per cent in Mangsir of its monthly target.
The revenue collection was 12.87 per cent less than the target in the month of Poush and 29.52 per cent less than the target in Magh, said Tirtha Raj Paswan, information officer of the Office.
The Bhairahawa Customs Office is the second largest in the country and the biggest in Lumbini Province.

The Office, which had been collecting more revenue than the target every month since the beginning of the fiscal year 2021/22, has not been able to meet the target since the month of Poush.
The NRB has recently issued a circular to keep the foreign exchange reserves in the country in balance as the country's foreign exchange has been heavily spent on luxury goods while domestic production has been low.

This provision is not applicable for essential items. It is applied to luxury items. Prior to the issuance of the circular, these 20 items were being imported at 10 per cent cash margin or in some cases by opening LCs through banks.
The Department of Customs has given an annual target of Rs. 127.42 billion to the Office for the fiscal year 2021/22. The Office has collected 58.50 per cent of the total target revenue in seven months.

The Customs Office has collected revenue of Rs. 7.36 billion in the month of Magh against its target of Rs 10.30 billion given by the Department, according to the customs office.
According to information officer Paswan, the target has been around Rs. 10 billion every month since the beginning of the current fiscal year.
"There has been a decline in revenue collection in the months of Poush and Magh, one of the main reasons being the new provision implemented by the NRB," he said.
Imports of luxury goods have declined since the NRB introduced new provisions. At the Bhairahawa Customs Office, where 600-700 vehicles used to be inspected daily, the number has now dropped to 250, said Paswan.

Decline in imports of luxury goods is the main reason behind shrinking revenue collection. Import of cars, jeeps and vans, chocolates, tiles, marble, granite, motorcycles and scooters declined in the month of Poush and Magh compared to the previous five months.

Mainly, the provision requires to keep 100 per cent cash margin applied for spices, chocolates, beverages, tobacco products, cosmetics, wood and furniture, shoes, sandals, hats, helmets, tiles, marble, granite, glassware and artificial jewellery.
Similarly, the provision to keep 50 per cent cash margin is applied for light vehicles, including car, jeep, van, motorcycle and scooter.