Laxmi Capital News
Letter of Credit to be made mandatory for trade with India, China

Nepali traders will have to start using banking channelfor making or receiving payments from traders in China and India very soon.

A meeting of Revenue Leakage Control High-LevelMonitoring Committee chaired by Minister for Finance Yuba Raj Khatiwada held onTuesday decided to implement the rule of making payment only through bankingchannel for such imports and exports.

Once the new rule comes into force, payments for importsand exports with China and India have to be made via Letter of Credit (LC) frombanks. It will replace mode of payments like telegraphic transfer (TT) anddemand draft that are current in use, according to Revenue Secretary ShishirDhungana. 

Almost all trade with China and India is done through TTand demand draft as well as cash. 
The new move comes at a time when the finance ministry is struggling to meetthe monthly targets of revenue collection which has surprisingly gone downafter Khatiwada, in January, announced to implement reference price onvaluation of imported goods to control evasion of customs tax. 

The import of tobacco products and garments has seen amajor drop after the decision to implement reference price in customsvaluation. 

Meanwhile, the committee, which also has InspectorGenerals of both Nepal Police and Armed Police Force, has also decided to beefup security and revenue surveillance on possible routes of smuggling.

Trading with countries except India and China is alreadyvia LC only. 

“The government will gradually implement LC as mode ofpayment for trade with both the neighbors,” added Dhungana. 

 

Source : My Republica, 18th April 2018

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