Prices of Essential Commodities Remain Almost the Same Post-GST

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The effect of Goods and Services Tax (GST) implemented from July 1 last year by India is yet to be felt on essential commodities prices in Bhutan.

A grocery shop in Bhutan. (Source: https://www.bhutan-short-tour.html)

 

By Krishna Ghalley|Business Bhutan

 

The effect of Goods and Services Tax (GST) implemented from July 1 last year by India is yet to be felt on essential commodity prices in Bhutan. However, the prices of some other goods have fallen slightly. GST ranges from 5%-28% in Bhutan. However, GST on export from India is exempted.

According to owners of some retail outlets, prices of a few commodities have fallen by up to 10% at the most since a month ago.

However, the prices of rice and other essential commodities, which were supposed to fall post-GST regime, has remained the same. Prices, according to the merchants, is determined not by the GST alone but by market forces. Since most of the Indian rice is consumed internally or exported, the price falls when the export drops and vice versa.

Prices of goods determined by market forces rather than the GST

“GST is just a taxation system but the price is determined by the market factors,” said Umesh Prasad, a Phuentsholing trader. “So far the price of rice has remained almost the same pre and post GST regime.”

Meanwhile, the prices of Horlicks and toothpaste have decreased by 10 and 5% respectively. The price of Horlicks has fallen from Nu 250 to Nu 225 per jar.

Similarly, noodles costs less by Nu 2 now. “There is not much change in the price except for a few goods,” said the manager of the Tashi Shopping Complex, Anup.

A wholesaler has confirmed that due to customs duty, the price of oil has increased. Though the GST does not apply on such commodities, the price has increased in India.

Other goods like Maggi noodles cost Nu 11 now; less by Nu 1. Cosmetic products also cost less, according to the manager of Zimdra Impex, Bikash Sharma.

The manager of Eight Eleven said that except for a few items, prices have not changed. Oil, rice, flour and salt though are not taxed in Bhutan but their prices keep on fluctuating. The price of biscuits have reportedly fallen, too.

As for liquor, shopkeepers said that the price of Bhutanese liquor was revised twice last year. A bottle of peach wine costs Nu 200 compared to Nu 230 last year. “But it cannot be ascertained if this is due to GST,” said Dechen Wangmo, a wine shop owner. However, the price of Indian and other imported wines remains the same.

Also, the impact of GST on pharmaceuticals and footwear is yet to be felt. Right now, the prices are constant.

Has GST benefits been passed down to the consumers?

The Office of the Consumer Protection under the economic affairs ministry is monitoring whether the GST benefits have been passed down to the ultimate consumers. The team from the department already started their rounds of monitoring in Phuentsholing last year.

The department has so far conducted monitoring on the automobile industry. It will then shift its focus to the 15 essential commodities in the market. The department after compiling the report was supposed to submit to the Prime Minister’s Office for action.

A consultant, Naman Siddarth of IMS Taxo services working with the Association of Bhutanese Industries and the Bhutan Chamber of Commerce and Industry said that prices will fall in the Bhutanese market and the customers can benefit ultimately.

The export invoice should be declared at the Land Customs office in Jaigaon where GST will be exempted. Any wholesale dealer should now sell below the Maximum Retail Price (MRP) as the price contains the GST component. 

“The prices of commodities should be cheaper by up to 30% in Phuentsholing than in Jaigaon,” he said.

 

This article first appeared in Business Bhutan and has been edited for the new Bhutan Times.

 

 


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