After extensive rounds of meeting and negotiation, both Bhutan and India have agreed on Nu 1.740 bn as excise duty refund for 2012 from the Indian government.
The formal agreement will be signed on Saturday evening between the Director of Revenue and Customs Bhutan and the Director General of India’s Custom Body in the presence of the Finance Minister Namgay Dorji.
The 2013-2014 Annual Budget had forecast revenue of Nu 1.706 bn from excise duty. The agreement will mean that the budget will get an additional Nu 34 mn as the final amount is higher.
In 2013, Bhutan received Nu 3 bn as the excise duty for the two years of 2010 and 2011 coming to an average of around Nu 1.5 bn each year.
Of the Nu 1.740 bn excise refund, Nu 964.1 mn is the refund of factory or industry related import to Bhutan. The remaining Nu 776.47 mn refund comes from import made mainly by traders from the open market.
While there is not much discussion on the factory component as it is easier to calculate and prove, however, both countries usually have differing figures on the open market source imports from India to Bhutan.
An official, close to the negotiations, said that both sides present their figures, and after negotiations, a compromise is usually reached.
In the meeting, the Indian side also agreed to expedite the payment of Nu 57.13 mn which is pending out of the total payment of the Nu 3 bn excise duty refund for 2010 and 2011.
Bhutan also requested the Indian side to consider an additional Nu 449.13 mn refund as additional cess duty for petroleum products imported in 2010 and 2011 from India. And another amount of Nu 274.63 mn refund as additional cess duty for petroleum products imported in 2012.
An official said that the petroleum excise refund decisions may be made only later and the Indian side, after negotiations, may agree to a 50 percent of the asked amount.
The excise duty is one of the most important sources of government revenue and will form around 10 percent of the total revenue of the government.
As per the agreement between Bhutan and India, the current excise duty refund arrangement will continue till 2016, after which both sides would discuss the future nature of such a model.