With the Goods and Services Tax set to replace the Sales Tax, some civil servants who have claimed their vehicle quota fear they may miss out on its benefits. Currently, the quota allows civil servants to purchase vehicles without paying Sales Tax and Customs Duty.
A Vehicle Import Quota allows the purchase of vehicles up to 3000 cc without paying Customs Duty and Sales Tax. The quota provides an exemption from customs duty and sales tax, up to 800,000 ngultrum.
However, starting next year, Sales Tax exemptions will no longer apply, even for quotas. This means the only benefit will be the Customs Duty exemption.
The change will affect those importing cars from India, where Customs Duty does not apply, leaving the quota with no value at all. Some civil servants who did not want to be named told BBS that the sudden policy change is pressuring them to buy vehicles even when they are not ready.
One said, “With the recent tax reform, along with a very short notice regarding the quota becoming ineligible for vehicle imports, especially from India starting next year, that is January 1st, 2026, it has greatly affected me and many of my colleagues in similar situations, as vehicles from India are the only affordable option for us. And moreover, this sudden policy change is, in a way, pressuring us to make an immediate purchase regardless of our readiness.”
“Civil servants like me have not even received any form of compensation or any form of monetisation compensation or nor are we able to sell it. So, it’s a very unfair situation, and I think the government or the finance ministry should give us some clarity about the changes that are going to occur in the next year, vis-a-vis the quota rules. It’s very unfair for the civil servants who wait for almost five to seven years for their promotion and get the quota,” added another civil servant.
Until 2023, civil servants became eligible for a vehicle quota once they reached a certain grade. Under the Pay Structure Reform Act of Bhutan 2022, the issuance of new quotas stopped in July 2023. However, the ministry notified eligible civil servants in February to claim their quotas by June this year, saying that failing to do so would lead to forfeiture of the quotas.
The notification also states that the quotas shall be valid for seven years from the date of issuance.
BBS contacted the finance ministry for a response, but has not heard back. However, the ministry issued a public notification earlier this month, cautioning people about the tax reforms. The ministry stated that due to the transition, the existing Sales Tax and Green Tax applicable on vehicle import will be discontinued and replaced by GST and the Excise Tax. It also states that vehicle quota exemptions will continue to be valid for Customs Duty only.
Samten Dolkar
Edited by Kipchu
