Aum Deki from Changangkha in Thimphu, on the morning of 1st January, went to her usual shop to buy her packet of Doma priced at Nu 50. She gave Nu 50, but the shopkeeper shook her head and asked for an additional Nu 3 as ‘GST Tax.’
Shifting the scene to Paro town, in the midst of a group of shoppers faced with GST Tax at a major shop there, a local resident had whipped out his phone showing a video and busy blaming the current government for the GST Tax. The Parop who was in an irate mood loudly declared, “I will never vote for this government again.”
The introduction of the 5% Goods and Services Tax (GST) from 1st January 2026 has been welcomed with collective shock, a whole lot of confusion and also some anger due to the increased prices of essentials.
Department of Revenue and Customs (DRC) Commissioner Sherab Chogyel, said, “People are facing a sudden price increase mainly due to old stocks which had been charged Bhutan Sales Tax (BST) also being charged the GST. Once the old stocks are sold out and items are charged only GST, then price increases will either be more moderate and many items’ prices will also come down.”
The overwhelming majority of Bhutan’s imports are from India in all categories of goods from food to consumer items.
The GST Tax system excludes rice, cooking oil, salt, sanitary pad and wheelchair.
Alcohol and tobacco will be more expensive due to the separate Excise Tax.
There will be price drops in men’s and women’s clothes, cosmetics, shampoos, carpets, blankets, plastic furniture, betel leaves and more.
On why even basic and essential items like vegetables, cereals, meats, fruits, medicines and farmers implements are not exempt from GST, the DRC had taken the call that if there are more exemptions then the tax implementation would be more difficult and complicated and it may even lead to leakages and give tax officials arbitrary powers which can also lead to misuse.
The GST is not just about collecting a consumption based tax but it will also help ensure more transparency in other tax declarations like Business Income Tax and Corporate Income Tax.
Here, Commissioner Sherab said that the DRC will not do away with the older taxes, which have already been paid. He said if this is done then there are many others like grocery shops, etc., who also have old stock and are facing the same issues.