Govt will make books completely tax free to promote reading culture

The Cabinet has also asked for a report from BICMA on its new Book rules


The upcoming session of the Parliament will see the government seeking the Parliament’s clearance to completely do away with all taxes on books.

This will mean that, once approved, the current 5 percent sales tax and also the 20 percent Customs duty that make many books at least 25 percent more expensive will no longer be there.

With a clear majority in the National Assembly the government’s Tax removal proposal, which will be put forward by the Finance Minister is expected to pass without any issues.

The Prime Minister Lyonchhen Tshering Tobgay said, “We have always maintained that while education is important, lifelong education is also very important. It is in that context that we want to promote a reading culture.”

Lyonchhen said that the government is doing away with the Tax to demonstrate that it is serious about promoting reading.

While the Tax breaks were given for the National Reading Year in 2015, on its expiry the DRC again started imposing the 5 percent sales tax and 20 percent customs duty from 2016 onwards. This again led to controversy among both book sellers and book lovers especially on account of the 20 percent custom duty taxes.

The government to permanently address the issue will have to permanently alter the Taxes and to do so will need the clearance from the National Assembly. This is why it is being put up to Parliament.

While the bookstores has only requested the government to do away with the 20 percent customs duty the government as a bonus is also doing away with the five percent sales tax.

The issue of taxes on books became a major issue in 2015 which had been declared as a National Reading Year.  Until 2014 most bookstores only paid a five percent sales tax to import all types of books from India.

However, the Department of Revenue and Customs (DRC) from 2015 and in accordance with its own rules started imposing an additional 20 percent customs duty for books that while being brought in from India had not been printed in India.

The DRC declared that even though these books came from India it was third country products as the original source was abroad.

The DRC rules were also in line with the South Asia Freed Trade Agreement (SAFTA) that allowed South Asian countries to impose custom duties on each other if the original source of the goods was from a third country. This clause was there in SAFTA to allow individual countries to protect their domestic industries from any dumping of third country products through a neighboring country.

On the other hand book stores argued that India itself imports many of these foreign titles as they are not available for printing in India.

Book stores and even readers made a hue and cry as they felt the additional taxes contradicted the objectives of the National Reading Year.

A government official, on the condition of anonymity, said that the DRC found out about the third country books due to some of the book store sellers themselves complaining about each other.

The government through the Finance Ministry announced that it would do away with all the book taxes for the duration of the reading year in 2015.

However, here another controversy cropped up when the Opposition party alleged that the government was violating the constitution and the 2011 Tax case verdict of the Supreme Court in directly doing away with taxes instead of putting it to Parliament as a bill.

In response the Finance Ministry quoted a section of the 2011 verdict which said that while the National Assembly had the sole right to impose and alter taxes it also clarified that the government of the day can directly declare and grant tax incentives.

The Finance Ministry declared that the former government had granted Nu 6.6 bn in Economic Development Policy tax incentives using this clause even after the tax verdict.The ministry at the time said that the tax incentives given to the books by comparison using the same clause is miniscule.

Meanwhile, the Cabinet addressing another book related controversy has asked the Bhutan Info Comm and Media Authority (BICMA) for a report on its publication rules with regard to books.

BICMA Director General Chencho Dorji in a telephonic interview said that in case of the need to keep one copy of each title, BICMA will not ask for a copy for most books like fiction, children’s books, etc but it may do so for only politically ‘sensitive’ books that can impinge on Bhutan’s national security.

Another issue was on every new title having to pay Nu 5 to BICMA. The DG said that the Nu five charge is only a kind of a registration charge for every title of a book imported which would mean that only a Nu five charge would be applicable even if multiple copies of the same books under the same title are imported. He claimed that during the stake holder’s discussion they had agreed to the Nu 5 charge.

Another rule that bookstores are upset about is BICMA’s registration rule which says, “All imported publications including books, newspapers and magazines registered for sale and distribution within Bhutan shall carry the “BICMA registration number” on the last page in case of news papers and first page in case of books.”

BICMA had recently updated and come out with its new publication rules for books and newspapers.

The Prime Minister said that it is important to remember that agencies like BICMA are functioning in accordance with certain rules. He said at the same time the Cabinet while not micromanaging can also review and look at certain issues brought to its notice.

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