Prime Minister Tshering Tobgay and the officials from the ministry of finance (MoF) on August 19 emphasised the opportunities India’s Goods and Services Tax (GST) could bring to traders in Phuentsholing.
Representatives from various sectors, businessmen, and industrialists from Phuentsholing, Gelephu, Samtse, and Samdrupjongkhar attended the presentation the department of revenue and customs (DRC) made on GST’s impact and opportunities.
Lyonchhen said that zero tax on import from India with the GST regime would make goods and commodities cheaper in Phuentsholing.
“There is big opportunity for traders to profit,” he said.
Prime Minister and MoF officials pointed that 78 percent of total import from India was under trading sector, which is the buy-and-sell form of business.
“But we have to do formal trade, which is to directly buy from the manufacturers,” the prime minister said.
MoF officials highlighted that trade directly done with the manufacturers would not have GST applied, which would make goods and commodities in Phuentsholing cheaper than the market across the border. As goods imported from the principal company in India would not have GST, tax will be assessed on that same amount reflected in the invoice.
If an importer brings in a commodity from informal market and has paid GST, customs will add the GST amount and tax on the total amount assessed, revenue and customs officials clarified.
The prime minister emphasised there would be risks when goods and commodities get cheaper in Phuentsholing. What is imported into Bhutan should not go outside, he said. “That would be illegal.”
One of the major highlights at the meeting was that of passing the GST’s benefits to the consumers.
“Please pass the benefits to retailers and the consumers,” prime minister said.
Finance minister Namgay Dorji said that traders should not focus on just profiting themselves. Distribute the benefit to the consumers, he added.
As the government suggested traders to consider formal trade and deal directly with the manufacturers, a concern of affordability also came up during the meeting. An entrepreneur, Kencho Tsheten, a pipe wholesale dealer, said that most traders would not be able to directly buy from the manufacturers.
“Manufacturers insist to buying in large scale amounting to millions,” he said. “Otherwise, manufacturers would ask us to buy from distributors.”
Kencho Tsheten said that there are not many distributors in Phuentsholing. Most distributors are in Silliguri and Jaigaon, and buying from them would mean to pay GST, the entrepreneur said.
In such cases, prime minister said there were no options. But Bhutanese will have to ask the GST benefit, he added.
“The dealers across the border are there to sell in Bhutan,” prime minister said. “But if Bhutanese can take up distributorship, nothing better than that.”
Meanwhile, importers informed the government about the problem they face at the Jaigaon land customs office due to GST implementation. They said that at times vehicles remained for a week at the customs office.
Finance ministry officials said that a team had visited the office on August 18.
“We saw no problem at all,” said DRC director Yonten Namgyel.
The findings have been submitted to the government proposing that GST experts from India should be requested to visit the border towns, the DRC director said. He further said that experts at offices do not understand the practical difficulties faced in the field, which would be cleared upon a visit.
Since GST was introduced for the first time in India, there would be problems, finance minister Namgay Dorji said.
“Some kind of trading issues will always be there and we will also have to go through some,” the minister said, adding that people must contact relevant officials of relevant offices should there be need for help.
An AWP official shared that his office had to pay GST while importing machinery. However, it was not a huge amount and it would be refunded.
Prime minister said that the government would assist in getting the GST amount paid refunded if the amounts are huge.
Rajesh Rai | Phuentsholing