More than six months after the Goods and Services Tax (GST) came into force, the Department of Revenue and Customs (DRC) has shifted from helping businesses adjust to enforcing the law with strengthened monitoring, stricter audits, and penalties.
The GST was introduced in January this year. For most of the time since, the DRC focused on supporting businesses to understand the new system. They conducted awareness programmes and walked traders through registration, invoicing and filing, while holding back on penalties as they adjusted.
That period is now over.
Since the beginning of this month, the department says it has begun enforcing strict compliance, shifting the responsibility onto businesses to calculate and declare their own tax correctly.
“Until now, our officers have been visiting business entities and calculating the tax they need to pay,” said Kuenzang Thinley, DRC’s Commissioner for GST.
“From now on, businesses must calculate and declare their own tax through self-assessment. If the declaration is accurate, it will be accepted. But if it does not match the information we have, we will conduct a risk-based audit.”
Stricter compliance also means that eligible businesses that have not yet registered must do so without delay. The rules apply to any business whose annual turnover crosses Nu 5M in a year. Under the GST Act, failing to register with the department carries a fine of Nu 10,000. More serious offences, including tax evasion, carry penalties of twice the tax amount and, in some cases, fines of up to Nu 1 M.
The department also says it will scrutinise filings closely.
“We can examine not only their Current Deposit accounts but also their savings accounts,” the Commissioner said. “If necessary, we can also look into the accounts of immediate family members. We will compare their tax declaration with their financial statements, lifestyles, properties and spending to determine whether the taxes they have declared reflect their actual economic activity.”
The GST Act allows the department to require a person, by written notice, to hand over records and information. But searching a person, their premises or their documents requires a court warrant, except where there is an immediate risk that evidence will be destroyed or that someone will flee. Businesses that disagree with an assessment have 30 days to object in writing, and can take their case to a Review Board or, ultimately, the court of justice. The Act also allows penalties to be waived, in whole or in part, where a taxpayer misses a deadline for reasons beyond their control, or where the delay was the department’s own. To date, no taxpayer has been fined or penalised under the GST Act.
“Businesses are required to declare their sales every month,” the Commissioner said. “We urge them to do so in accordance with the law.”
According to the department, about 4,100 businesses have registered under the GST system, generating Nu 4.8bn in revenue. The finance ministry projects that GST revenue will reach around Nu 14bn in the 2026-27 financial year, a 47 per cent increase over what the old sales tax collected in 2024-25. Officials caution, however, that a reliable comparison with the previous system will require at least a full year of operation.
Currently, under Schedule IV of the GST Act, 32 categories of essential commodities and social-welfare goods remain exempt from the five per cent tax.
Deki Lhazom
Edited by Sonam Wangdi
