GST will minimise tax leakage: PM

MB Subba

Introduction of the Goods and Services Tax (GST) billing software will minimise tax leakage, according to Prime Minister Dr Lotay Tshering.

He was responding to the opposition leader’s concerns on the government’s readiness to implement the GST this week. Opposition Leader Pema Gyamtsho (PhD) said that leakage of taxes was one of the concerns. 

The prime minister said that some taxes were today being collected based on estimated values of the goods available in shops or stores. Once the GST is implemented, the prime minister said that problems related to leakage of taxes would be addressed.

 “We will put in place a proper GST billing software for GST so that revenue leakage is minimised,” he said. He said that business entities with a turnover of Nu 5 million (M) would be required to register under the GST Act.

 The prime minister said that development of the software is estimated to cost the government about Nu 575M. The Druk Holding and Investments (DHI), he said, had been entrusted to develop the software by hiring experts from abroad.

 Dr Lotay Tshering said that hiring of specialist service from abroad was estimated to cost about USD 1,500 a day. He informed that the government and the DHI had already held discussions on development of the software.

 He said that officials were being trained on implementation of the GST. The government, he said, would also conduct awareness programmes on the GST.

 Panbang MP Dorji Wangdi said that India had encountered three issues with the implementation of GST in 2017 – registration of fake companies, production of fake invoices and false claims of GST reforms. He cautioned that such problems might arise in Bhutan. 

 However, Finance Minister Namgay Tshering said that Bhutan as a small economy would be able to avoid GST-related problems that were faced by big economies like India. “India is a diverse country with many states and union territories, where implementation of GST is not easy,” he said.

 According to the government, the introduction of GST is a major overhaul to the tax regime and that it reinforces tax administration and help the government recoup an additional revenue of Nu 3 billion annually.

 The GST is a consumption-based tax, which is supposed to eliminate the cascading taxation effect. Just like any other GST regime across the globe, business entities and individuals in the country would be levied GST on all goods and services either manufactured within or imported.

 Exports, on the other hand, are considered zero-rated supplies, free of tax.

 Under GST, consumers will pay a minimum of 7 percent GST. The consumer-based taxation system is expected to help the country generate revenues through broadening of the tax base.

The legislative committee of the House has been asked to present its recommendations today on some of the sections that members could not agree on.  

The House is scheduled to adopt the GST Bill today. 

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