The tax cut on the fuel prices in India will not have any effect on the prices in Bhutan.
That is because the fuels imported are without tax, said Chief Trade Officer, Rinchen Lhazom, Department of Trade, Ministry of Economic Affairs.
Currently, a litre of petrol costs Nu 86.28 and Nu 82.93 per litre for diesel in Thimphu. Petrol prices have increased by 89.9 percent and diesel by 118.9 percent since May of last year.
The Central Government of India slashed excise duty on petrol by Nu 5 per litre and diesel by Nu 10 per litre on November 4 after the surging cost of crude oil pushed fuel prices to record highs.
Following the central government, at least 16 states and seven union territories in India slashed the Value Added Tax (VAT) on petrol and diesel prices. After the price cut, a litre of petrol in most parts of the country has come down in price to under Nu 100, according to the media reports.
The retail prices of petrol and diesel in India are decided after adding central excise, commissions paid to dealers, and VAT on basic oil prices.
With regard to Bhutan, General Manager of Bhutan Petroleum Division, State Trading Corporation of Bhutan Limited, Sugan Pradhan, said that retail price of the fuel is decided after the transportation, sinkage (fuel being volatile), handling losses while unloading, and operational costs.
A five percent green tax and five percent Bhutan sales tax are also levied on the fuel. Bhutan purchases a litre of petrol at Nu 73 and a litre of diesel at Nu 71 from India.
Sugan Pradhan said that for transporting 1,000 litres of petrol or diesel, it costs Nu 1,250, which equates to Nu 1.25 per litre.
He added that Nu 600 per 1,000 litre of petrol and Nu 500 per 1,000 litre of diesel is incurred as a depot surcharge.
Bhutan has signed a memorandum of understanding with India to revise the fuel prices on 1st and 16th of every month.
In an earlier interview, Rinchen Lhazom said price revisions in India are done daily. However, it would be inconvenient for Bhutan, since import from India takes at least two days, and another one or two days to distribute to other parts of the country.
Edited by Jigme Wangchuk