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GoI announces almost Nu 3B excise duty refund

Tax: The Government of India (GoI) announced an excise duty refund of Nu 2.91 billion (B) for the year 2015, an increase by Nu 973 million (M) compared with 2014.

The increase was attributed to an improved recording system of the Department of Revenue and Customs (DRC).

GoI’s director general of Directorate General of Performance Management (Customs and Central excise), Mahender Singh, said that officials at the DRC have been efficient in preparing the documents and keeping the records. “There was hardly any point of disagreement between the Indian delegates and Bhutanese officials this time.”

However, a major portion of increased refund is attributed to increase in imports.

For instance, import of high-speed diesel (HSD) and motor spirit (MS) petrol last year increased by 4,551 kilolitres (KL) and 2,364KL respectively compared with 2014. Also, import of vehicles increased from 2,919 in 2014 to 7,075 last year. The increase in import was attributed to the increase in excise duty refund by 348M during the period.

Excise duty is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country unlike customs duty that is levied on imports.

Although most of the commodities are subject to excise duty levy in India, there are exemptions issued by way of notification on goods of special interest such as petroleum and metallic waste products, food items, tools, spare parts and accessories, medicine and medicinal equipment.

Since imports made by hydropower projects in Bhutan are exempted from excise duty at source, no refund claims are reflected.

Finance minister Namgay Dorji said that excise duty refund forms about 11 percent of the national revenue, which the country has been able to realise because of the goodwill and cooperation between the two nations.

Tshering Dorji

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  1. Development practitioner

    Excise duty (also sometimes referred crudely sin duty) is applied to specific items that are considered not so safe to society, and to counter those impacts the government need to incur additional expenditures for which indirect tax is applied on those items. For example, excise duty on alcohol, tobacco etc. In case of goods imported from India, MRP includes all taxes including excise duty. When Bhutanese consumers pay excise duty as part of MRP the amount goes to Indian exchequer while the goods are consumed/used in Bhutan and Bhutanese government needs to undertake those preventive/corrective measures. So GOI refunds excise duty to us.
    Now the issue is Goods and Services Tax (GST) is expected to be implemented soon in India. The GST will subsume central indirect taxes like excise duty, countervailing duty and service tax, as also state levies like value added tax, octroi and entry tax, luxury tax. The question is can we import GST-exempt goods from India and pay here only BST (in the absence of tax reforms)?

  2. “Excise duty is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country unlike customs duty that is levied on imports.” I’m still not clear with this concept of GoI paying excise refund, since this duty is imposed on goods produced within country. I wish if one could tell how do it work.

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