GST impact on prices of goods yet to be felt

 Goods and Services Tax (GST), imposed by the Indian government, is running into its third week but

Goods and Services Tax (GST), imposed by the Indian government, is running into its third week but impact on prices of consumer goods is yet to be felt.

This is because business houses still retain old stocks while new consignments are yet to arrive.

While some businessmen are speculating that GST will impact the rates, others are of the view that it will have minimal impact.

Currently, market prices are still pre-GST rate; not much has changed. Bhutanese merchants say that since new goods have not arrived in the market, whether the prices will increase or decrease remains to be seen. Most of the orders placed by these merchants have not reached the market till now.

8 Eleven, a wholesale dealer, still supplies goods at the old rates. “While some say that prices will change, we are not sure as new stocks have not arrived,” said the Manager, Bal B Gurung.

Others are saying that the prices will increase by up to 8% on essential items like rice, oil and dal. Price of branded items will also increase, according to the Manager of Zimdra Impex, another wholesale dealer. He has already received a bill where 5% GST was added to every item purchased. “So, there will be increase in prices,” he said.

Some are still confused over prices of tax-exempted goods, which existed before GST. So far, previous Value Added Tax (VAT) exempted goods are also imposed GST when imported to Bhutan.

GST ranges from 5-28% depending on the types of goods and services in India. People are hoping that the Indian government will relax GST on some essential commodities as India is the country’s prime trading partner. “Otherwise, middle and lower class people will suffer,” said Sonam Dorji, a private employee.

Reportedly, some merchants have started taking advantage due to GST imposition without knowledge of tax range. A retailer said that the rate of sugar has increased by Nu 5 but the tax rate has remained constant at 5%. “The traders are cashing in on the situation without consumers’ knowledge,” said a Phuentsholing resident.

The prices of kitchen ware are expected to decrease up to 7%. Proprietor of Jain Metal Store in Phuentsholing, Manoj Jain, affirmed this. “We are hoping this will be so,” he said. However, he has not received any new consignments even after 20 days of placing orders. “Indian suppliers are also confused over tax on exports especially to Bhutan where no tax was levied before,” said Manoj Jain.

Delhi Stores in Phuentsholing has placed new orders but is yet to receive the goods. Ashok Aggarwal, the proprietor, said that prices have remained constant so far and will not change even if his new orders arrive. “The tax will remain the same for foot wears and so will the prices.”

The majority of the business community in Phuentsholing is convinced that until new orders arrive, impact of GST will remain a matter for speculation.

Krishna Ghalley from Phuentsholing