Arya News - Businesses can face up to Nu 100,000 in fines over unexplained price hikes.
THIMPHU – The Department of Revenue and Customs (DRC) is preparing to impose penalties on retailers and suppliers who raised prices on cigarettes, pan masala, and beer without justification, following a nationwide inspection prompted by growing public unease over sudden price spikes.
The fines will range from Nu 5,000 to Nu 100,000 depending on the severity and source of the price manipulation.
Although no formal complaints were filed with the department, the agency launched the inspection after widespread reports of abrupt price increases and fears of looming shortages.
DRC’s Director General Sonam Jamtsho said inspections across eight regions have been completed, and officials are now verifying evidence to determine whether retailers or suppliers should be held responsible for the increases.
“So far, we have not imposed any fines, but soon we will. Retailers who claim their suppliers increased prices must show us proof such as invoices or transaction screenshots. If the retailer cannot prove it, the retailer will be imposed fine accordingly,” he said.
The DRC Head office has already issued instructions to regional offices to pinpoint the exact locations of unjustified hikes and undertake enforcement accordingly.
Officials emphasised that penalties will differ based on the scale of the violation, stating that the increases were not uniform across the country. “We can’t impose the same penalty on everyone, because the extent of the price raise varies,” a DRC official said.
DRC officials said the department undertook comprehensive market surveillance in Thimphu and seven other regions – Samdrupjongkhar, Phuentsholing, Gelephu, Samtse, Mongar, Bumthang, and Paro after these concerns circulated widely.
“In Thimphu, we coordinated closely with the Competition and Consumer Affairs Authority (CCAA). We asked for the reasons behind the price increases. If retailers claim the suppliers raised prices, we will ask them to produce invoices and transaction records,” the official said.
The inspection confirmed that prices of cigarettes, pan masala, and beer had increased in many areas, but not uniformly. Even within Thimphu, price variations were noted between the core town and outlying areas such as Babesa.
Similar disparities were found across other regions.
Many retailers attributed the increases to higher supplier prices. Others admitted raising prices simply because competitors had done so, or because they anticipated upcoming tax changes in 2026 and took a “preemptive” approach by adjusting prices early.
A few cited shortages in the market.
The DRC official explained that distributors may have reduced the number of cartons supplied to retailers, forcing them to adjust profit margins upward.
However, the department stated that overall national supply has not declined. “Last year, if the importers brought in 6,000 cartons of cigarettes between July and December 2024. Based on historical import data, we have allowed the same quantity this year. Unless there is a sudden significant increase in the number of smokers or drinkers, this volume should meet market demand. So, we do not expect real shortages,” the official said.
The department will also inspect potential hoarding before year’s end, amid concerns that some distributors may be restricting supply to drive up margins.
DRC officials said that any consumer who encounters unjustified price increases can walk in and file a complaint either with DRC or CCAA.
Officials said assessments will be finalised soon, after which penalties will be levied on businesses found to have raised prices beyond permissible limits.