For Pema Wangchuk, a grocery owner in Phuentsholing, the introduction of Goods and Services Tax (GST) since July 1 last year does not hold any meaning.

According to him, this is because Bhutanese consumers do not benefit from GST. He said he did not understand anything about GST until now.

He said he bought most essential commodities from Tashi Commercial and 8 Eleven stores, which import from the manufacturers directly. “There was no price reduction.”

With the government announcing that GST would make goods and commodities cheaper compared to the town across the border, Bhutanese businessmen and residents expected the price drop.

“But we haven’t seen much change,” Pema Wangchuk said. “In fact, maximum retail price (MRP) for some goods have increased.”

He cited the example of how MRP of Dettol soap and hand sanitiser has increased. “The MRP of Colgate toothpaste has, however, decreased to Nu 45 from Nu 50.”

Other importers also voice the same concern.

A manager with Jatan Prasad Lalchand Prasad (JPLP) said that the MRP of Horlicks, a product that the store buys directly from manufacturers, has decreased recently. MRP of a 500gm Horlicks has decreased to Nu 228 from Nu 250.

“We buy most of the products from Tashi and there is no difference after the GST,” the manager said.

Some importers said GST is just a replacement of VAT in India, which was existed before the new regime commenced.

“VAT is removed and GST is added,” a manager in one of the major import houses in Phuentsholing said. “However, there are some fluctuations in the tax that make the difference.”

Biscuits imported from India also should decrease considering the 18 percent GST. However, the price has not changed.

Cost of cosmetics, bathing soaps, deodorants, beauty creams, soaps, oils, chocolates, jams, and jellies were expected to reduce by at least 18 percent. There is also no change in price.

An employee with Namsey Pharmaceuticals said that price of a few products has decreased. “But it is minimal,” he said.

Meanwhile, the price of certain electronic items has changed.

Manager BL Sharma with one of the oldest enterprises in Phuentsholing, Dolma Enterprise, said that after GST was introduced, prices have decreased for most electronic goods in his shop.

“Most of our products fall under 18 percent GST slab,” he said.

The MRP of an Orient-brand ceiling fan at Dolma Enterprise is Nu 1,640. The shop gives 30 percent off to wholesale buyers and 25 percent to other buyers.

A Godrej refrigerator with an MRP of Rs 15,450 at Dolma is sold at Nu 11,400 in wholesale deal. This is a discount of more than 25 percent.

BL Sharma said that such price cuts aren’t offered across the border. “Most electronics are cheaper in Bhutan,” he said. “We are getting the benefit and we are passing the benefit to the customers.”

Meanwhile, BL Sharma said that they offer 10 to 15 percent “flat discount” on MRP for all the products. This, he said, is because Dolma Enterprise directly gets its products from dealers.

At the land customs across the border

After the GST was introduced, the land customs station (LCS) across the border had struggled in clearing invoices considering the shortage of manpower and proper system. Hundreds of trucks carrying Bhutanese imports were stranded for several days.

During that time, Saint Gobain Ceramic Materials Bhutan Private Limited (SGCMBPL), an industry in Pasakha, had procured raw materials and some consumable items and cleared the invoices without generating shipping bills in the EDI system at the LCS. The LCS and the Bhutanese importers did it as an interim measure.

Today, the system has improved and Saint Gobain is following to regularise the bills in the system. However, Saint Gobain has written to concerned authorities that the LCS is not willing to update.

The materials were declared in Bhutan customs and the invoices are worth more than Nu 10 million.

Should the bills not be updated in the system, the Indian exporter that exported to Saint Gobain would be liable to pay the GST for that quantity of materials exported to Saint Gobain. Further, the exporters would also be charged with a penalty. In this case, Saint Gobain will be liable.

Saint Gobain officials did not reply to Kuensel’s email for comments.

Rajesh Rai | Phuentsholing