Nepal Rastra Bank (NRB) has introduced a new provision, allowing
domestic firms to buy software from India and pay in US dollar by
opening Letter of Credit (LC) in banks and financial institutions (BFIs)
worth up to US$ 10,000.
Issuing a circular to the licensed ´A´ and ´B´ class banks and financial
institutions (BFIs) on Sunday, the central regulatory bank has paved
the way to open LC in US dollar to make payment for software bought from
India.
Earlier, Nepali firms were required to pay in Indian Currency for software acquired from India.
According to NRB officials, the provision to allow payment in US dollar
will reduce the cost of software in comparison to payment made in Indian
currency. "The new provision will make the software cheaper as buyers
no longer need to pay 13 percent tax," Bhisma Raj Dhungana, acting
executive director at the Foreign Exchange Management Department of NRB,
told Republica.
Buyers are required to pay 13 percent tax if payment is made in Indian currency.
To avail the facility, the buyers, however, should furnish the invoice
that shows VAT and excise duty has been waived off by the US government
for software export in US dollar.
According to the new provision, buyers should furnish the bill of advance payment if the software is delivered online.
