The Bhutanese Leading the way.
The luxury of owning gold is becoming increasingly out of reach for the average Bhutanese citizen as prices soar, and jewelry stores worry that the introduction of GST could further cripple the market.
Jewelry stores in Thimphu face a dilemma, especially as gold prices have surged significantly this year. On top of that, adding GST charges to their products poses a serious threat to their businesses.
One store owner said in a recent interview that customer numbers and purchases have dropped. “The only customers coming in to buy are those who can afford it. Most customers are trying to exchange or get a good deal for jewelry,” he said.
He added that adding GST would be problematic since only a small portion of the population can afford gold, and charging GST would make prices even higher for consumers.
A jewelry store owner in Thimphu said the current price for one tola (11.66 grams) of gold is around Nu 195,000, which they purchase from Bhutan Duty Free Limited. With a 5 percent GST, this adds Nu 9,750, bringing the total price to Nu 204,750 per tola.
“Even for a half tola, the price is Nu 97,500, and GST would add Nu 4,875, making the total Nu 102,375,” said the store owner.
Jewelry shop owners fear that charging GST amid rising gold prices could drive customers away.
“Currently we are not required to charge GST, but if we do, prices will increase. While some people may still be able to afford it, we risk losing a huge portion of our customer base, since 5 percent GST is not a small amount for most people,” said another jeweler.
“GST has already created concern among customers. Now they ask whether we charge GST on our products or not,” said a female store owner.
Many shop owners warn that long-term implementation could threaten their businesses. One prominent store owner said, “The gold market in Bhutan could shrink if we start implementing GST, and in the worst-case scenario, we may even go bankrupt.”
Differences in gold prices between Bhutan and India also add to the challenge. “Jewelry prices are a bit cheaper in India, especially in Jaigaon, where most Bhutanese shop. One tola in India is Nu 190,000, whereas in Bhutan it is Nu 195,000,” he said.
“If we add GST, it will go over Nu 204,750, which is significantly higher than Jaigaon prices. Plus, some stores in Jaigaon do not charge GST. People will definitely go there to buy,” he added.
Store owners also said that their profits from servicing and making jewelry are minimal but important. Service and making charges range from Nu 1,000 to Nu 12,000. “If we charge GST on Nu 12,000, it adds Nu 600 more,” said a female store owner.
“This increases the burden on customers, making gold ownership even more out of reach,” she added.
One jeweler said that service and making charges are a main source of income, generating around Nu 1,000,000–1,500,000. “We haven’t applied for GST yet because our turnover doesn’t reach Nu 5,000,000,” he explained.
“Customers might also go to Jaigaon for servicing and making their jewelry if we start charging GST,” he added.
As gold prices continue to rise, jewelry store owners stress the importance of government intervention and hope for measures that help sustain the industry while keeping gold accessible to the public.
