The Economic and Finance Committee of the National Assembly has proposed revising the threshold for taxing interest income, raising the exemption limit to Nu 400,000 for fixed deposits while retaining Nu 300,000 for dividends. The proposal sparked renewed debate in the National Assembly today as members reviewed changes recommended by the National Council.
Initially, the assembly had approved a 10 per cent tax on annual interest income exceeding Nu 300,000 for both fixed deposits and dividends.
However, when the bill reached the National Council, the House of Review revised the exemption thresholds, raising it to Nu 400,000 for fixed deposits and lowering it to Nu 200,000 for dividends.
In response, the Economic and Finance Committee proposed a revised threshold: accepting the council’s recommended Nu 400,000 ceiling for fixed deposits and retaining the assembly-endorsed ceiling of Nu 300,000 for dividends.
The recommendation received mixed reactions from the members.
“The difference between fixed deposits and shares is that fixed deposits carry no risk. By the end of the year, depositors receive interest based on a set percentage. In contrast, shares involve risk. That’s why the ceiling should be decided by the members, but I believe it’s important to keep the threshold equal for both fixed deposit interest and dividends,” said Tandin Wangchuk, Health Minister.
“The council has submitted its recommendation. We must remember that it represents 20 members from the 20 districts, along with five eminent members, and their decision reflects a balanced approach in the interest of the people and the country,” said Wangdi, MP, Bumdeling Jamkhar, Tashi Yangtse, NA.
“I support the committee’s recommendation of a Nu 400,000 ceiling for fixed deposits and a 300,000 ceiling for dividends. The reason is that the two are fundamentally different,” said Kuenga, MP, Nyishog-Saephu, Wangdue Phodrang, NA.
Tashi Tenzin, a member of the economic and finance committee, said that the committee’s recommendation, submitted today, is based on the principle of equity.
“For dividends, we also discussed the possibility of increasing the ceiling to 400,000 to encourage capital formation. However, the issue was that the 400,000 ceiling for dividends was never proposed or discussed throughout the deliberations. Therefore, we could not introduce it as a new ceiling at this stage, as it would go against the rules of procedure,” said Tashi Tenzin, Member, Economic and Finance Committee, National Assembly.
Following deliberations, the house passed the Income Tax Amendment Bill 2025, which will come into effect next year.
Samten Dolkar
Edited by Phub Gyem
