Goods imported from India should be cheaper by zero to 28 percent in Bhutan according to initial government estimates because of the GST (goods and services tax) system that was rolled out in India from July this year.
The prices of top ten commodities imported from India will fall by 14 percent on an average. Price of consumable goods price is expected to drop by about 5 percent. Prices of the essential items, as it is tax-free.
GST is a single integrated taxation system within India that combines 17 states and central taxes into a single tax of six tax bands varying from zero to 28 percent. It is a destination and consumption based tax, imposed on the final consumer. It follows a multi-stage collection mechanism and credit of tax paid at previous stage is available for set off at the next stage of the transaction. The GST system is expected to enhance competitiveness of the industry and increase consumer welfare in India.
In India, 7 percent of the items come under the exempted list, 14 percent fall in the 5 percent tax band, and 17 percent in the 12 percent tax band, 43 percent under the 18 percent tax band and 19 percent of the items fall under the 28 percent tax band.
In total 81 percent of all goods and services fall below or in the 18 percent tax band and the balance items will fall under the 28 percent tax band.
However, transit of goods (Third country goods coming through India territories) will not be taxed in keeping with bilateral trade agreement.
The GST system is also expected to promote formal trade with India such as electronic filing/ declaration and payment of taxes.
Before GST, goods and services imported from India to Bhutan were subject to levy of Excise Duties and Value Added tax (VAT). VAT was refunded to the importer on issuance of landing certificate by Bhutan customs and the Excise Duty was refunded by India to the Bhutanese government annually.
To avail GST- free goods it must be imported through GST-registered entities in India and not from the open market. Therefore importers, suppliers, distributors, dealers, wholesalers and retailers are advised to import goods from GST registered entities in India and ensure that benefits are passed to consumers.
The Office of the Consumer Protection, Department of Trade and Department of Revenue and Customs are creating awareness and working to ensure that benefits of the reduced price under GST are passed to consumers. The Office of Consumer Protection (OCP) has been tasked to ensure that all importers, suppliers, distributors, wholesalers and retailers strictly adhere to this directive.
OCP is empowered by Consumer Protection Act of Bhutan 2012 to ensure that the licensed business entities do not mislead or give wrong information to consumers regarding prices or method of determining prices.
Further, section 34 of the Consumer Protection Rules and Regulation 2015 strictly prohibits business entities from distorting the information and impairing consumers to make informed decisions. Defaulters will be made to pay fines equivalent to the value of goods or services and the business license may be revoked.
The government directed the Ministry to ensure that the benefits of fall in the prices of goods are passed on to the consumers.