Nepal Supreme Court Halts NPR 100 Customs Levy on Goods Imported from India

Nepal's Supreme Court Halts Controversial Customs Duty Provision

Nepal's Supreme Court has issued an interim order restraining the government from enforcing a contentious customs duty provision on goods worth more than Nepali Rupees (NPR) 100 brought into the country from India. The provision, which was set to be implemented, would have required individuals carrying goods valued above NPR 100 to pay customs duty.

A joint bench of Justices Hari Prasad Phuyal and Tek Prasad Dhungana directed Nepal's Office of the Prime Minister and Council of Ministers, the Ministry of Finance, and other concerned authorities not to implement the disputed provision until a final verdict is delivered. The petition challenging the rule argued that the customs provision was inconsistent with Nepal's Customs Act, 2081, particularly clauses related to exemptions on imported goods.

The court's intervention comes days after Nepal tightened enforcement of customs rules for cross-border travellers entering from India. Under the implementation, individuals carrying goods valued above NPR 100 were required to pay customs duty, prompting protests and criticism in border regions. The measure affected travellers frequently crossing the open India-Nepal border for small-value purchases and household goods.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Media reports in Nepal said traders, daily commuters, and local residents had raised concerns over the low exemption threshold and its practical implications for border communities. India's Ministry of External Affairs had addressed the issue last month after reports emerged over the stricter enforcement by Nepali authorities.

India's Ministry of External Affairs spokesperson Randhir Jaiswal stated that India understood that Nepal's move was intended to curb informal trade and smuggling. However, Jaiswal noted that India had also seen reports about enforcement by Nepali authorities and remained engaged on these developments.

Nepal and India share an open border that allows citizens of both countries to travel freely without visas or passports. Border trade and informal retail purchases form a significant part of local economic activity in several adjoining districts. Customs and border trade regulations between the two countries have periodically emerged as politically sensitive issues, particularly when new enforcement measures affect local movement and retail trade patterns.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The latest dispute surfaced shortly after Nepal's newly elected government moved to tighten implementation of existing customs provisions. Nepali authorities had maintained that the rule was not newly introduced but was part of an existing legal framework aimed at regulating cross-border inflows of goods.

The Supreme Court's interim order pauses enforcement until the matter is fully adjudicated, allowing traders, daily commuters, and local residents to continue their activities without the burden of customs duty payments.