The Government of India has exempted the levy of excise duty on petrol and diesel
From today, retail prices for petrol will decrease by Nu 10.29 a liter while the price of diesel will decrease by Nu 7.75.
The government yesterday announced that the price of petrol and diesel will be reduced by about 17% and 14% respectively.
Although all exports to Bhutan from India have become zero-rated with the introduction of the Goods and Service Tax by the Government of India (GoI) since July 1, 2017, the excise duty for petrol and diesel was levied and refunded to Bhutan.
However, now the GoI has exempted the levy of excise duty on petrol and diesel.
According to a press release from the Prime Minister’s office, the drop in the fuel prices will stimulate the economy by lowering the cost of transportation that will result in a drop in prices for consumer and industrial goods across the board.
“This will also enhance our competitiveness and productivity and will be a major stimulant to further supporting the strong economic growth that our country is enjoying,” states the press release.
The government has also urged all businesses to provide equivalent reductions in the prices of goods and services being provided to citizens.
“The reduction in fuel prices is expected to decrease the Consumer Price Index by approximately 0.74 percent. The Royal Government has instructed the relevant sectors agencies to ensure that lowering of fuel price has desired effect across all sectors of the economy,” states the press release.
The government has said it will review and assess whether the benefits of reduction in price have been passed on to the citizens and its impact on the economy after six months. Based on the review, additional measures will be taken if required.
However, with the reduction in fuel prices, the government is expected to forego huge revenue.
This is because with the exemption of excise duty on petrol and diesel, the government will also not get the excise duty refund from India including the decreased level of sales tax and green tax.
“Despite the significant loss of revenue to the national exchequer, the Royal Government has decided to pass on the full benefits of the excise exemption to the general public of Bhutan without imposing any additional taxes,” states a press release.
According to the government, the national exchequer will be foregoing revenues of Nu 1.514bn in excise duty refund and Nu 94mn in sales tax and green tax.
“To mark the auspicious day and honor His Majesty the Fourth Druk Gyalpo, the revised fuel prices shall come into effect from 11:11 AM, November 11, 2017,” states the press release.
Lucky Wangmo from Thimphu