The GST impact
The Ministry of Economic Affairs had notified that all the licensed business entities in Bhutan that with the introduction of Goods and Services Tax ( GST) in India, the prices of all goods imported from India, are expected to fall from 0- 28%. The government has directed the Ministry to ensure that the fall in the process is passed to the consumers. The Office of the Consumer Protection has been entrusted with the task to ensure that all importers, suppliers, distributors, wholesalers and retailers stick to the directives very strictly.
The Office of Consumer Protection has been empowered by the Consumer Protection Act of Bhutan 2012 to ensure that the licensed business entities do not mislead and give false information to consumers regarding prices and method of determining the prices.
As per the circular the defaulters shall be liable to pay equivalent to the value of the goods or services or the business license may be revoked.
The general consumers must know that to avail GST free goods, the goods must be imported through the GST registered entities in India and no from the open market. However the benefit of GST will not be applicable on the goods bought from the local market.
As such the import from India will be cheaper for top ten commodities by 14% and the prices of consumable goods are expected to fall by around 5% on an average. Bhutanese manufacturers importing raw materials from India will be cheaper, so that Bhutanese manufactures can compete with others in the international markets.
However it has been given to understand that there will be no impact of GST on essential goods like vegetables, rice, oil, salt, sugar and milk which means that the average Bhutanese will have little to worry about the prices.
On the impact of tariff on the trading sector, the sector will benefit as the tax burden at the point of entry will be reduced by around 5% as about 78% of taxes on import are paid by trading sector.
Due to the electronic filling of documents including the invoices, declarations at the point of entry and the payment of taxes the system will provide the most accurate data and the question of under invoicing and over invoicing will not arise. Moreover the GST on export of services from India is exempted provided it is paid in convertible currency.
As the average rate of inflation in Bhutan is about 5% as per the latest statistics and the fall in prices of consumable goods due to GST is about 5%, which means that Bhutan will have no inflation for now. For now it may be called a positive impact of GST.