"There is no question whatsoever of India establishing immigration points within Nepali territory at Pashupatinagar and Lumbini," stated a release issued by the embassy on Tuesday.
Nepali media has been reporting about the so called agreement and last week the Supreme Court issued a stay order on implementing the deal based on a writ petition challenging the development.
"The reality is that India and Nepal discussed setting up such immigration check point in their respective territories at these two points, just as they exist at other agreed points along the Indo-Nepal border," it added.
The embassy stressed that the proposal was made in good faith and in the best interests of Nepal to facilitate foreign tourist traffic (of third country nationals) through these points.
"Establishing immigration check point at Pashupatinagar is intended to facilitate movement of foreign tourists from Darjeeling to Ilam, and the one at Lumbini to facilitate those who wish to visit Lumbini after completing the Buddhist circuit in India," the release stated.
At present such tourist traffic is routed through immigration points at Kakarbhitta and Bhairahawa, which increases the travelling time and distance, thus discouraging their movement to Nepal.