Consumers across the country remain frustrated over unfair price hikes since the rollout of the Goods and Services Tax. The Department of Revenue and Customs clarified that the current price hike could be due to double taxation, whereby businesses charge both GST and the sales tax while selling old stocks imported before 1st January. The department said prices are likely to stabilise within three months as goods imported under the former Sales Tax regime gradually exhaust.
With the implementation of the Goods and Services Tax, some consumers feel that they are being charged unfair prices for certain goods and services.
“While GST is beneficial in increasing government revenue, it is affecting people in the lower-income section. Earlier, I purchased coffee beans for my café for Nu 1,455, but the price has now increased to Nu 1,550,”m said Prakash Mongar, who runs a café in Thimphu.
“I didn’t notice much difference in prices when it was just the sales tax, but now GST feels like an extra charge,” added Sarita Rai, a resident of Thimphu.
Phurpa Lhamo, who works as a cashier for a grocery store in Thimphu said she felt the prices of goods exceeding MRP since the implementation of the 5% GST.
“We have received numerous complaints and grievances from customers, who say they are increasingly feeling the financial strain.”
“Earlier, we could handle two to three customers within five minutes, but now it takes time to explain prices and GST to customers, particularly the elderly and illiterate, which is very difficult. For cosmetics, GST is easily accepted, but for medicines, customers complain that they are essential items and should be tax-free,” said Binu Maya Rai, a pharmacist.
Many also took to social media platforms, pouring out their frustration and sharing their observations and opinions about the impact of the new tax regime on everyday expenses.
The Department of Revenue and Customs or DRC said that in preparation for the transition to the GST, it has been actively creating awareness among businesses, urging them not to stockpile goods ahead of the new tax regime.
The DRC further stated that it had requested businesses, particularly members of the Hardware Association, to submit their stock balances to facilitate proper tax adjustments so that businesses do not charge the sales tax on consumers after the implementation of GST. However, the department has not received any submissions.
“For example, if adjustments are to be made, they have to show that last year they imported goods worth Nu 500,000 of which goods worth Nu 300,000 have been sold. They must then show how much sales tax is included in the remaining stock. The transition to the GST regime would require doing away with the sales tax component, which would allow for adjustments, credits, or refunds. However, if they do not provide the stock position, we cannot make any adjustments,” said Pema Wangdi, Collector with DRC’s Revenue Intelligence Division.
Meanwhile, the DRC said the current import trends indicate that existing inventories are being depleted, as businesses increasingly bring in new stocks to replace supplies that have been exhausted.
“It is competition in an open and free market, where only the fittest survive. Businesses importing new stocks will be taxed at only five per cent GST, allowing them to offer goods at lower prices. As more businesses begin selling under the new tax regime, those holding older stocks will no longer be able to maintain higher prices based on previous taxes and will be compelled to reduce their prices,” added Sonam Jamtsho, the Director General of DRC.
For now, the public can only wait as the market adjusts to these changes, a process that is never without challenges. Authorities say the prices should be guided by market forces, especially in a competitive environment where no single business dominates.
Success of the GST, however, will depend on a collective effort, with both businesses and consumers playing an active role in ensuring a smooth transition for the broader benefit of all.
Kinzang Lhadon
Edited by Phub Gyem
