More to gain from GST

l Tandin Wangchuk, Thimphu


To ensure that all consumers reap the benefits of lowered prices of the commodities after the introduction of Good & Services Tax (GST) in India, the government has notified all business entities to reduce their selling rates.

The government also warned all the licensed business entities to refrain from misleading the general public and spreading false information to consumers regarding prices or methods of determining the prices.

According to the officials from the ministry of economic affairs, prices of consumable goods imported from India will get slashed by around 5 percent on an average.

“Raw materials will become cheaper for our manufacturers. And this will reduce their cost of production, giving them an edge in the market,” said the officiating secretary of the ministry, Sonam P Wangdi.

Elucidating on what has changed in Bhutan after GST was introduced in India, the officiating secretary said that before June 30, 2017, goods were subjected to levy of excise duties and value added tax (VAT). “But since July 1, 2017, no taxes have been levied on imported goods from India except for five petroleum products,” he said.

“Before GST, VAT had to be refunded to the importers on issuance of landing certificate by Bhutanese custom officials but now it is exempted except for petroleum products. Earlier, the government of India had to refund excise duty collected to Bhutan but henceforth, GST is not levied on goods meant for consumption in Bhutan,” said Sonam P Wangdi.

He further mentioned that before the introduction of GST in India, VAT had to be levied at the point of sale only, but now GST will be charged both at entry point and selling point in India.

“There is no doubt that the prices of commodities will become cheaper in Bhutan than in India but the general consumers must understand that to avail GST-free goods, they have to import through GST registered entities in India,” he said.

He mentioned that all importers, supplier, distributors, dealers, wholesalers and retailers are advised to import goods from GST registered entities in India and ensure that benefits of fall in price is passed down to the consumers.

“Non compliance with the notification will be dealt as per the Consumer Protection Act provisions,” said the officiating secretary.

GST is a single integrated taxation system within India that combines 17 states and central taxes into a single tax of six tax bands varying from 0 to 28 percent. It is a destination and consumption based tax imposed on the final consumer. It follows a multi-stage collection mechanism and credit of tax paid at the previous stage is available for set off at the next stage of the transaction. The GST system is expected to enhance competitiveness on the industry and increase consumer welfare.

Although GST is beneficial to the consumers in Bhutan but it is unwelcoming for the manufacturers, especially the steel and cement producers.

“GST from Indian perspective is to encourage more exports and limit imports. What is the use of producing more at lowered raw material costs if we cannot sell our products in the market,” said a manufacturer.

Sonam P Wangdi clarified that when cost of production falls, the manufacturers will get competitive edge in the market. “And so far, India has mentioned nothing about limiting imports from Bhutan,” he added.

Meanwhile, the economic affairs ministry called for a general meeting with the stakeholders and media personnel to disseminate awareness of the benefits of GST system. The meeting was held on August 28, 2017, at the ministry’s conference hall.

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