As expected, vehicle prices have come down across all categories from 1st January 2026 with the implementation of the 5% Goods and Services Tax (GST) and the Excise Tax which combined together is lower than the Sales Tax and Green Tax of the past.
At the same time the price reductions have been a little bit more muted than expected leading to disappointed reactions among the public.
The final price of cars this year depends not only on the tax rates but also on the prices from the factory or suppliers outside and also how much benefit the dealers want to pass on.
What will make things transparent is if vehicle dealers share their cost of vehicles, the taxes paid and their margin rates.
The new tax system essentially should mean lower costs for cars for two reasons. The first is that it did away with the high Bhutan Sales Tax of 45% to 70% and replaced it with the 5% GST, and secondly the Excise Tax that was supposed to cover up the reduced GST did away with the 10% to 20% Green Tax as it was thought that the Excise rate is already covering the environment component.
Here are a few comparisons.
In the case of Maruti the price of Alto K10 VXI has come down by Nu 80,565 with the new price being Nu 713,893 compared to Nu 794,458 before.
The price of Celerio VXI has come down by Nu 60,724 with the latest price being 751,668 compared to Nu 812,392 earlier.
The price of WagonR ZXI is down by Nu 82,088 with the new price being Nu 798,837 compared to Nu 880,925 before.
The New Brezza price is down by Nu 135,353 with the price at Nu 1,342,950 compared to Nu 1,478,303 before.
The Jimny Alpha price is down by Nu 212,148 with the latest price at Nu 1,606,385 compared to Nu 1,818,533 before.
Prices have come down In Hyundai vehicles too. When it comes to the Creta 1.5 Petrol S model the price drop is Nu 233,834 with the new price being Nu 1,806,632 compared to Nu 2,014,881 before.
The price for the i20 1.2 Petrol Sportz model dropped by a marginal Nu 50,110 with the new price at Nu 1,052,520.
The Exter 1.2 Petrol price dropped by Nu 101,036 from Nu 1,160,458 before to now Nu 1,059,422.
In the case of Kia the price of the Sonet Petrol K.1.2 dropped by Nu 118,347 from Nu 1,396,962 before to now Nu 1,278,615.
In the case of Mahindra Bolero 4 WD BSIV the price dropped by a marginal Nu 26,095 since taxes were already low before. This vehicle now costs Nu 828,285.
The Scorpio 4 WD Z8L7S price is down by Nu 233,834 from Nu 3,280,070 to Nu 3,046,236.
In the Toyota category the price of the popular Innova 2.0 cc 8 seater is down by Nu 156,506 from Nu 3,087,962 to Nu 2,931,456 now.
The Toyota Hilux 2.4 cc Mid Option Euro VI cost is down by Nu 661,455 from Nu 9,377,896 to Nu 8,716,441.
However, the price will drop by another Nu 1,842,189 once the Free Trade Agreement with Thailand completes the Parliamentary process which is expected to be soon. This is because the Customs Duty will be removed.
This will bring the final price of the Toyota Hilux to Nu 6,874,252 after a total price drop of Nu 2,503,644.
The Toyota Fortuner MT price has dropped by Nu 556,466 from Nu 7,347,377 to Nu 6,790,911.
The Toyota Prado price has come down from Nu 12,798,563 to Nu 12,056,130 which is a drop of Nu 742,433.
Meanwhile, a headache for dealers is what to do with their earlier stock. This falls into two categories. In the first category is vehicles for which green taxes have not been paid and so they can be sold at the new tax rates under the warehousing system introduced by the Department of Revenue and Customs (DRC). The DRC is likely to extend this.
However, the big problem is for those vehicles for which Green tax has been paid (mainly before July 2025) and here the request made to DRC is if these taxes can be refunded. If this is not done then there maybe no buyers as these vehicles will be more expensive once clubbed with GST and Excise Tax.
