GST ben­e­fits mon­i­tor­ing be­gin

Business Bhutan - - Front Page - Kr­ishna Ghal­ley from Phuentshol­ing

The Of­fice of the Con­sumer Pro­tec­tion (OCP) un­der the eco­nomic af­fairs min­istry started mon­i­tor­ing whether the ben­e­fits of Goods and Ser­vices Tax (GST) are be­ing passed down to the ul­ti­mate con­sumers last week.

Ini­tially, the de­part­ment will mon­i­tor the ben­e­fits on au­to­mo­bile trade and then shift to 15 es­sen­tial com­modi­ties in the mar­ket.

The de­part­ment is still com­pil­ing the re­ports which will then be submitted to the Prime Min­is­ter’s Of­fice for ac­tion.

The team has so far vis­ited ve­hi­cle show­rooms and col­lected in­for­ma­tion

on the chal­lenges and ben­e­fits they have en­coun­tered post-GST. It is also com­pil­ing data on old ve­hi­cle stocks and in­com­ing numbers.

The de­part­ment aims to find changes in ve­hi­cle prices pre and post GST and how the con­sumers are ben­e­fit­ted. Deal­ers might keep larger profit mar­gin, which is sup­posed to be passed on to the con­sumers there­fore the team will re­veal the per­cent­age of ben­e­fits passed down.

“We are still com­pil­ing the data,” said the Chief Trade Of­fi­cer from OCP, Gopal Prad­han.

The in­ves­ti­ga­tion will be con­ducted pri­or­ity wise based on the cost of the prod­uct. Higher cost com­modi­ties are pri­or­i­tized first, said the Chief Trade Of­fi­cer.

“Ve­hi­cles be­ing high­end prod­ucts, traders tend to keep large profit mar­gins,” he said, “this needs to be mon­i­tored.”

The team will also start mon­i­tor­ing in the cap­i­tal and other towns af­ter com­plet­ing the pro­gram in Phuentshol­ing.

Two months since the In­dian gov­ern­ment im­posed GST and the Bhutanese are yet to feel tan­gi­ble ben­e­fits of the tax re­form. In fact, Bhutanese traders and con­sumers re­main con­fused as prices of com­modi­ties have ac­tu­ally in­creased.

The In­dian gov­ern­ment had de­clared that ex­ports from In­dia are GST-ex­empt. Prices though have in­creased in whole­sale stores, which has com­pelled re­tail­ers to in­crease theirs and ul­ti­mately con­sumers have been pay­ing more. For in­stance, the price of rice has in­creased by up to Nu 45 per kg, ac­cord­ing to a whole­saler.

A ma­jor­ity of trade in Phuentshol­ing has come to a stand­still af­ter GST due to lim­ited im­port from In­dia. Most of the shops re­main out of stock for months. A sys­tem fail­ure at Jaigaon land cus­toms of­fice ex­as­per­ated In­dian trans­porters who once blocked ex­port from In­dia to Bhutan. Lack of re­quired equip­ment and man­power at the of­fice stalled ve­hic­u­lar move­ment to Phuentshol­ing leav­ing more than 200 trucks stranded at Jaigaon.

How­ever, ex­perts are of the view that prices should be com­par­a­tively cheaper than prices in Jaigaon.

A con­sul­tant, Na­man Sid­darth of IMS Tax o ser­vices work­ing with As­so­ci­a­tion of Bhutanese In­dus­tries and Bhutan Cham­ber of Com­merce and In­dus­tries said that prices will fall in the Bhutanese mar­ket. The ex­port in­voice should be de­clared in the land cus­toms of­fice at Jaigaon where GST will be ex­empt. Any whole­sale dealer should now sell be­low Max­i­mum Re­tail Price (MRP) as it con­tains GST com­po­nent. “The price of com­modi­ties should be cheaper by up to 30% in Phuentshol­ing than in Jaigaon,” he said.

To avoid taxes, he said that the gov­ern­ment needs to block in­voices com­ing to Bhutan un­less the same is termed as ex­port in­voice un­der GST rules. “Banks can also play an im­por­tant role in this as the pay­ment is routed through the same based on the in­voic­ing,” he said.

Na­man Sid­darth fur­ther said that if an In­dian dealer, whole­saler or dis­trib­u­tor sup­plies goods to Bhutan, it shall be zero-rated and the com­plete tax paid by him to the man­u­fac­tur­ers shall be re­funded to him.

Mean­while, Prime Min­is­ter Dasho Tsh­er­ing Tob­gay, re­cently also di­rected traders to pass GST ben­e­fits to con­sumers. “Phuentshol­ing is the first town to see GST im­pact. GST ben­e­fits must be passed on to the ul­ti­mate con­sumers,” he said.

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