The GST im­pact

Bhutan Times - - Editorial -

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.

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