Tax planning means the legal practice of arranging your money in smart ways to pay less tax. This topic came under the spotlight as the assembly endorsed a 10 per cent tax on interest income from fixed deposits exceeding Nu 300,000 annually. A council member expressed concern over the potential misuse of the exemption threshold.
The recently endorsed Income Tax (Amendment) Bill 2025 exempts people from paying tax if their interest income from fixed deposits is not more than Nu 300,000 annually.
However, during the introduction of the bill in the National Council today, the MP from Bumthang raised concerns. He warned that the Nu 300,000 cap could encourage people to split large sums into multiple accounts under different names to avoid tax. Netizens also shared the same view.
“I’m concerned this could encourage illegal practices. To avoid paying tax on interest income exceeding Nu 300,000, some people might open multiple fixed deposit accounts and split their funds across different names to stay below the taxable threshold,” said Kencho Tshering, MP, Bumthang, NC.
But the Finance Minister clarified that it is legal to do so. He said it is called tax planning, practised widely around the world.
“Tax planning is legal, and we are not in a position to object to it. For example, if someone deposits Nu 4.6 M and earns Nu 300,000 in interest, they won’t be taxed. Even if a person has more than that and decides to split the deposits, placing 4.6 M in their spouse’s name and another in their child’s name, that is still within the bounds of the law,” said Lekey Dorji, Finance Minister.
The bill will be further reviewed and deliberated in the council in the coming days.
Samten Dolkar
Edited by Tandin Phuntsho
