The National Council’s Natural Resources and Environment Committee has recommended changing the exemption thresholds for interest and dividend income. The National Assembly endorsed a 10 per cent tax on interest income over Nu 300,000 from both fixed deposits and dividends. The committee proposed raising the exemption to Nu 400,000 for fixed deposit interest and Nu 200,000 for dividend income. This is one of the three recommendations presented by the committee.
The Natural Resources and Environment Committee proposed three key recommendations for the Income Tax Bill of Bhutan 2025 today.
It suggested changing the tax-exempt threshold for interest earned.
The National Assembly, last week, endorsed a 10 per cent tax on interest exceeding Nu 300,000 in a year, from both fixed deposits and dividends.
However, most parliamentarians did not agree to the committee’s recommendation.
“The government’s initial proposal in the bill to levy a 10 per cent tax without any threshold was a very good idea. But now, the committee has raised the exemption limit to Nu 400,000. That means a person would need around Nu 5.6 M in fixed deposits to even be taxed. We won’t collect any tax from someone earning Nu 399,000 in interest. Members should think carefully about this decision. I believe the committee needs to revisit and discuss the government’s original proposal,” said Jamyang Namgyal (PhD), MP, Pema Gatshel, NC.
The Council’s chairperson asked the committee to hold an internal meeting to review this recommendation.
The committee also proposed making the interest rate equal for both taxpayers and the Department of Revenue and Customs to ensure fairness.
The Income Tax(Amendment) Bill 2025 proposes that taxpayers pay a 15 per cent per annum penalty upon defaults, while the department pays 5 per cent per annum on delayed tax refunds.
Another recommendation is to change the commencement date of the Income Tax Bill. The bill, currently, proposes an enforcement date of 1st January next year, which, according to the committee, violates the Public Finance (Amendment) Act 2012. The Act requires any tax measure to take effect from the date it is tabled in the National Assembly. The finance minister introduced the bill on the 26th of May in the National Assembly.
The National Council will adopt the bill tomorrow.
Samten Dolkar
Edited by Sangay Chezom
