𝐂𝐢𝐭𝐢𝐳𝐞𝐧𝐬 𝐒𝐞𝐞𝐤 𝐂𝐥𝐚𝐫𝐢𝐭𝐲 𝐚𝐬 𝐆𝐒𝐓 𝐑𝐨𝐥𝐥𝐨𝐮𝐭 𝐂𝐫𝐞𝐚𝐭𝐞𝐬 𝐖𝐢𝐝𝐞𝐬𝐩𝐫𝐞𝐚𝐝 𝐂𝐨𝐧𝐟𝐮𝐬𝐢𝐨𝐧

…𝑫𝒆𝒑𝒂𝒓𝒕𝒎𝒆𝒏𝒕 𝒐𝒇 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒂𝒏𝒅 𝑪𝒖𝒔𝒕𝒐𝒎𝒔 𝒂𝒅𝒅𝒓𝒆𝒔𝒔𝒆𝒔 𝒑𝒖𝒃𝒍𝒊𝒄 𝒄𝒐𝒏𝒄𝒆𝒓𝒏𝒔, 𝒆𝒙𝒑𝒍𝒂𝒊𝒏𝒔 𝒆𝒙𝒆𝒎𝒑𝒕𝒊𝒐𝒏𝒔, 𝒑𝒆𝒏𝒂𝒍𝒕𝒊𝒆𝒔, 𝒂𝒏𝒅 𝒑𝒓𝒐𝒑𝒆𝒓 𝒄𝒐𝒎𝒑𝒍𝒊𝒂𝒏𝒄𝒆 𝒑𝒓𝒐𝒄𝒆𝒅𝒖𝒓𝒆𝒔

By Yeshi Dolma

Since the rollout of the Goods and Services Tax (GST) on January 1, ordinary citizens and businesses across the nation have faced widespread confusion over which services are taxed and which are exempt. Concerns about double taxation, proper receipts, and compliance obligations prompted the Department of Revenue and Customs (DRC) to hold a series of press briefings to clarify key points and reassure the public about the new system.

Kuenzang Thinley, Collector at the GST and BITS Project Office, emphasized that GST is not intended to burden essential services but to create fairness and consistency in taxation where services are commercial in nature. “For now, shopkeepers with an annual turnover below Nu 5 million are requested to refrain from applying GST at the point of sale,” he said. He added that penalties would be gradually enforced for businesses that are not registered for GST but continue to apply the tax. In accordance with the Goods and Services Tax Rules 2026, the first offence carries a fine of Nu 5,000, while subsequent offences are subject to Nu 10,000.

DRC officials clarified that GST would apply selectively to banking services. Core services such as granting and managing loans and credit, as well as handling deposit and current accounts, are exempt from GST. However, non-core services, including loan processing fees, ATM and credit card usage fees, and account maintenance fees, are subject to a 5 percent GST. Similarly, for remittance services, GST applies only to the service fee and not to the total amount remitted.

“These clarifications are important,” said Thinley. “GST is meant to foster a system built on trust and shared responsibility. Businesses remit taxes, citizens pay responsibly, and the government focuses on transparency rather than enforcement. This marks a new era where everyone does their part.”

Two weeks after implementation, Sonam Jamtsho, Director General of DRC, addressed growing concerns about preparedness at a second press conference. According to him, around 3,820 businesses had registered for GST, including 1,820 from the capital. “Preparations for GST began well before implementation,” he said, explaining that personnel received formal training across all eight regional offices overseeing the 20 districts. These offices conducted nationwide awareness and training programs for shopkeepers, reaching 2,629 out of 3,500 targeted communities, representing 74 percent coverage.

Post-GST price fluctuations have caused particular concern among consumers. The DRC attributes some recent price hikes to double taxation on old stocks, whereby businesses inadvertently charge both GST and the former sales tax on goods imported before January 1. Pema Wangdi, Collector of the Revenue Intelligence Division, assured that these price adjustments are temporary. “Prices are likely to stabilize within three months as goods imported under the former Sales Tax regime are gradually exhausted,” he said.

Proper use of trade codes has also been a source of confusion. Officials stressed that all shopkeepers must follow the Bhutan Trade Classification Schedule codes when supplying goods. For instance, only one specific type of rice, such as semi-milled rice under code 1006300, is GST-free, while edible oils, despite having many varieties, fall under just two specific trade codes. “We provide receipts that clearly mention the 5 percent GST and other required details,” said a grocery shop owner from Olakha. “I initially thought that all rice and oil were exempt from GST, but I now understand that exemptions depend on the specific trade codes. Applying the correct codes will take some time, but the process is clearer now.”

Ordinary citizens welcomed the clarifications and expressed relief at understanding their rights. Singye, a 66-year-old resident, admitted he was previously unaware that he could request a receipt or check if a shop was registered for GST. “After hearing the information shared during the press conference, I now understand that asking for a receipt is important,” he said. “From now on, I will make sure to ask for a receipt whenever I make a purchase.”

For many, the initial confusion stemmed from limited public knowledge about which services were taxable, how GST would be applied, and the procedures for compliance. Officials have repeatedly emphasized that the system relies on cooperation between citizens and businesses. The Department encourages citizens to verify receipts and for shopkeepers to use correct trade codes, creating a transparent environment that ensures fairness in taxation.

The phased enforcement approach appears to be calming public concerns. Thinley explained, “We will gradually collect all receipts and impose penalties, but the intention is not punitive. We aim to educate and build compliance over time. Those who are honest in their reporting and follow the rules will not face unnecessary difficulties.”

Some businesses have also used the tax change as a way to market their services. A woman shopkeeper in the capital said she highlighted the lower tax rate to attract customers. “Earlier, we were charging 10 percent sales tax, but now my shop charges only 5 percent GST,” she said. “I posted this on TikTok to let customers know that prices should be lower. It helps people feel more confident about shopping here.”

The Director General further emphasized that the implementation of GST was not rushed. “Concerns about preparedness are understandable,” he said. “But the process involved months of planning, training, and public awareness campaigns. Our regional offices have been instrumental in ensuring that shopkeepers across the country are informed and prepared.”

In practice, the GST reform is designed to balance the nation’s fiscal needs with the everyday realities of citizens. By exempting essential services and focusing on commercial activities, officials aim to minimize the burden on households while creating a reliable revenue stream for the government.

DRC’s communication strategy also reflects an effort to build public trust. By openly discussing penalties, exemptions, trade codes, and the rationale behind tax rules, officials hope to foster a sense of shared responsibility. “GST is not simply a tax to be collected,” said Thinley. “It is part of a larger effort to modernize the tax system and ensure that everyone participates fairly in contributing to national development.”

Citizens’ responses indicate that these efforts are beginning to take effect. Many have started to pay closer attention to receipts and service charges, while businesses are gradually adapting to the new procedures. The collaborative approach appears to be easing initial frustrations and creating a more transparent environment for economic transactions.

While some adjustments are still ongoing, particularly regarding proper trade code usage and double taxation on old stock, the overall direction is clear. The government, through DRC, is emphasizing clarity, education, and phased enforcement rather than immediate penalties. This approach, officials say, will allow both citizens and businesses to adjust to the new system without undue stress or confusion.

As the nation navigates its first months under GST, ordinary citizens are encouraged to actively participate in the process by requesting receipts, understanding which services are taxable, and holding businesses accountable for correct tax application. Meanwhile, shopkeepers are being urged to comply with training guidelines and use the correct classification codes for goods, ensuring that the tax system functions fairly and transparently.

“The GST reform represents a significant change,” concluded Jamtsho, Director General. “But it is built on a foundation of trust, transparency, and shared responsibility. Our goal is to create a system where citizens, businesses, and government work together, not in conflict, but in partnership, for the benefit of the nation.”

With continued education, phased enforcement, and clear communication, the initial confusion surrounding the new GST appears to be giving way to understanding and cooperation. Citizens are beginning to see the value of receipts and proper classification, while businesses are gradually aligning their practices with the new system. In this way, the reform is slowly achieving its objective: a transparent, fair, and trusted tax framework that engages everyone in the nation’s shared responsibilities.