Since Indian goods entering the country would now be cheaper due to tax exemption, deflecting or selling back goods would be penalized if caught, warned Lyonchhen Dasho Tshering Tobgay at a meeting with private sector representatives in Phuentsholing.
“Such activities are illegal,” said Lyonchhen.
Goods and Services Tax (GST) applies up to 28% in the Indian market but Bhutan-bound products are exempt due to which prices in India will be higher. However, Bhutanese customers will be liable to 10% Business Sales Tax.
Due to this, Indian traders could take advantage of the prices and re-import to India. However, Lyonchhen cautioned Bhutanese traders, especially wholesale dealers, against re-exporting goods to India.
He said that the government in collaboration with relevant stakeholders would conduct routine checks to curb deflection.
Meanwhile, finance minister Namgay Dorji said that the authorities will look into GST-related complications that the country is currently grappling with.
“The revenue and customs department will ensure that Bhutan-bound consignments are GST free,” he said.
The finance minister also advised traders to refrain from taking advantage of the price slump. “Post-GST prices will fall but customers will be the ultimate beneficiaries.”
The custom’s Regional Director, Sonam Dorji said the agency will assess whether the customers have paid GST while procuring goods and explore possible refunds.
“Customers have to show evidence of tax paid at source: the letter of undertaking or bond,” he said, “There are two kinds of invoices: one will reflect GST payment while the other will not. We can identify tax payment through the bills.”
Bhutanese traders were advised to buy from registered Indian manufacturers than from middle men in nearby Indian towns.
However, wholesalers in Phuentsholing said chances of selling back imported goods to India were slim since they managed to procure goods with much difficulty after GST imposition.
Proprietor of KC Store, Gyembo said that Indian traders purchase only goods manufactured in country like fruit juices. “We don’t sell Indian products back to them,” he said.
Manager of 8 Eleven, B.B Gurung, is optimistic that Bhutanese wholesale dealers will not deflect goods to India since they are aware of consequences.
“In fact, wholesalers ask for retail clients’ license to ensure that they are genuine Bhutanese. We do not even transport goods in Indian vehicles,” he said.
The Prime Minister and finance officials met with representatives from various sectors including businessmen and industrialists from Phuentsholing, Gelephu, Samtse, and Samdrup Jongkhar to talk on GST-related issues on August 19. The revenue and customs department also made a presentation on GST impact on the economy.
Krishna Ghalley from Phuentsholing