GST im­pli­ca­tions for Bhutan still un­clear

Business Bhutan - - Front Page - Kr­ishna Ghal­ley with ad­di­tional re­port­ing by Dechen Dolkar

Bhutan closely ob­served the Goods and Ser­vices Tax (GST) im­posed by In­dia start­ing July 8, a land­mark tax re­form by the In­dian govern­ment, since it would def­i­nitely be af­fected by this gar­gan­tuan move within its largest trad­ing part­ner.

How­ever, a week after GST was in­tro­duced; Bhutan still does not seem to be very sure about the eco­nomic rip­ples the GST would set in mo­tion at the lo­cal as well as the na­tional level.

The gen­eral public from busi­ness com­mu­nity to or­di­nary of­fice go­ers seems to have only a vague idea of what GST would mean for Bhutan in the long and short term.

For the busi­ness peo­ple, the prime rea­son for non­cha­lance is that most of the deal­ers still have old un­sold stocks in the stores. With not much new stocks ar­riv­ing in the coun­try, prices of goods and ser­vices have re­mained al­most the same. New prices will be de­fined only when new con­sign­ments ar­rive. These traders till now have com­plied with the old tax sys­tem and the new tax re­form is alien to them.

While the prices of some goods are ex­pected to rise, the oth­ers are ex­pected to de­crease based upon the tax weigh­tage.

Prices of some essen­tial commodities will fall, while those of cer­tain lux­ury items will rise. But again, this ap­pli­ca­tion is not uni­form.

How­ever, the main ob­jec­tive of GST is to re­duce tax for the fi­nal con­sumer in the value chain, with taxes adding fur­ther up in the chain oblit­er­ated. Most busi­ness­men

Busi­ness Bhutan talked to said they were con­fused and un­sure of how GST would af­fect prices in the mar­ket. “We can­not say how it will im­pact prices in the mar­ket. Till now we have been sell­ing old stocks at the same rate,” said the Man­ager of Ugyen and Brother’s Whole­sale and Re­tails, B. B. Gu­rung.

Un­til new con­sign­ments ar­rive in the mar­ket, traders will have to wait to get fa­mil­iar­ized with the new tax sys­tem.

Some busi­ness­men though have started re­search­ing on pos­si­ble im­pact of GST in the mar­ket. “We are work­ing to un­der­stand GST and its im­pacts. Right now, we are sell­ing old stocks at the ex­ist­ing mar­ket rates,” said a whole­saler.

It is be­ing pre­dicted that it might take a few more months to feel the ef­fects of the GST. Some In­dian traders have al­ready re­sorted to hoard­ing and pos­si­ble tax eva­sion meth­ods.

“The In­dian traders used to pay taxes for only half the prod­ucts, which was not much. But now ev­ery­thing will be tracked and there is lim­ited op­por­tu­nity to evade tax,” said an In­dian busi­ness­man who added that the chances are high for prices of goods and ser­vices to in­crease.

Even the au­to­mo­bile agents are deal­ing with old stocks cur­rently but prices will be changed ac­cord­ing to GST im­pli­ca­tions.

GST on jew­elry items has in­creased to 8%. A jew­elry shop owner said that prices will be re­set after new prod­ucts ar­rive. “It is an alien con­cept for most of us so we are just wait­ing and watch­ing,” said Karma Phuntsho of My Hand­i­crafts.

Mean­while, Deputy Sec­re­tary Gen­eral of Re­search and Pol­icy Depart­ment, Bhutan Cham­ber of Com­merce and In­dus­try, Chan­dra B. Ch­hetri, said that the cham­ber is in the process of con­duct­ing stud­ies on the im­pact of GST in the coun­try.

Com­ment­ing that there will be pos­i­tive im­pact es­pe­cially on Bhutanese in­dus­tries Chan­dra B. Chet­tri said: “While for con­struc­tion sec­tors, im­port of raw ma­te­ri­als will be cheaper, hir­ing of ser­vices would be ex­pen­sive for con­struc­tion in­dus­tries.”

Eco­nomic af­fairs min­is­ter Lekey Dorji said that the Min­istry of Fi­nance is work­ing on how GST will im­pact im­ports into and ex­ports from Bhutan to In­dia and what the govern­ment of Bhutan needs to do so that it will cause min­i­mum im­pact on the econ­omy and peo­ple.

“Rel­e­vant stake­hold­ers are be­ing con­sulted in the process,” said Ly­onpo.

Newspapers in English

Newspapers from Bhutan

© PressReader. All rights reserved.