With rising salaries pushing more people into the taxable income bracket, the finance ministry is reviewing the personal income tax exemption threshold. The review aims to ease the tax burden, particularly for lower and lower-middle-income salaried employees. The finance minister shared this during today’s “Meet the Press” session.
During the session, Finance Minister Lekey Dorji said that the current tax exemption limit, which was last updated in 2020, is now under review as part of a broader reassessment of the country’s taxation system. The ministry’s goal? To strike a balance between generating the necessary revenue and maintaining fairness, especially for middle- and low-income earners.
“Any potential revision will consider multiple factors, including the need to ensure a fair and equitable tax system, maintain tax compliance, and broaden the tax base while minimising the burden on salaried individuals, particularly middle-income and low-income earners.”
The finance minister added that, if found necessary, the revision will be a money bill that needs to be tabled in the Parliament. However, if changes are made, he said that they will be done with careful consideration of economic growth, tax compliance, and the broader impact on both the economy and individuals’ pockets.
“Any proposed changes will be carefully assessed for their fiscal implications and overall impact on taxpayers. As per the established protocol, the public will be informed in due course of any revisions or policy decisions arising from this review.”
The discussion comes at a time when wage reforms, such as the 2023 Pay Revision Bill, have led to salary increases for civil servants and state-owned enterprises.
While higher pay is welcome, there are concerns that rising taxes could reduce the benefits of the pay raise. As more employees enter the taxable income bracket, it leaves the government to find a balance between generating necessary revenue and avoiding excessive tax burdens.
Karma Samten Wangda
Edited by Sonam Pem
