Income Tax Act

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Document Information:

Year: 2001
Country: Bhutan
Language: English
Document Type: Domestic Law or Regulation
Topic: Taxation and Fiscal Issues

POST BOX NO. 117, THIMPHU, BHUTAN. Ph.: 322223, 322271, 322514,322529 Fax: 323154
ROYAL GOVERNMENT OF BHUTAN
MINISTRY OF FINANCE
TASHICHHODZONG

Foreword

The Ministry of Finance is pleased to bring out 2
nd edition of the Rules on the Income Tax Act of the
Kingdom of Bhutan, 2001. This revision was necessary to reflect recent changes mandated by the 82 nd
session of the National Assembly to the Income Tax Act, 2001 as well as to keep pace with changing
business and economic conditions that have taken place after implementation of the Income Tax Act in
2001.

The revised Rules supercede all previous circulars, notifications and rules governing Corporate Income
Tax, Business Income Tax and Personal Income Tax. The Rules must be read together with the Act, as
it follows the same section sequence of the Act for easy cross-reference by the users. Attempts have
been made, wherever possible, to keep these Rules simple, easy to understand, and practicable for
administrative ease and taxpayers’ convenience.

The revised Rules also define the legal responsibilities of the taxpayers as well as the tax authorities.
It is the legal responsibility of every taxpayer to make correct and timely payment of taxes, while the
legal responsibility of the tax authorities is to assess and collect taxes in a fair, effective, and
transparent manner.

The Ministry of Finance hopes that these updated Rules will facilitate better understanding of all
procedural and technical aspects concerning Corporate Income Tax, Business Income Tax and Personal
Income Tax, to both the taxpayers and the tax administrators, and ensure smooth implementation of
the Income Tax Act of the Kingdom of Bhutan, 2001 in the Kingdom.

(Wangdi Norbu)
Finance Minister

Rules on the Income Tax Act of the kingdom of Bhutan, 2001 Page i
TABLE OF CONTENTS

PART I
CORPORATE INCOME TAX

1 RULE NO.1 TAX HOLIDAYS AND INCENTIVES (CHAPTER 3, ALSO APPLICABLE TO PART II:
BIT) 1
2 RULE NO. 2 ALLOWABLE DEDUCTIONS (CHAPTER 4, ALSO APPLICABLE TO PART II: BIT) … 1
2.1 G
ENERAL PRINCIPLE ……………………………………………………………………………………………………………. 1
2.2 D
IRECT COSTS (SECTION 11) …………………………………………………………………………………………………. 2
2.3 E
MPLOYMENT EXPENSES (SECTION 12) …………………………………………………………………………………….. 2
2.3.1 Salary ………………………………………………………………………………………………………………………. 2
2.3.2 Wages ………………………………………………………………………………………………………………………. 2
2.3.3 Benefits …………………………………………………………………………………………………………………….. 2
2.3.4 Bonus ……………………………………………………………………………………………………………………….. 3
2.3.5 Contribution to Provident Fund and Gratuity Fund ……………………………………………………………… 4
2.3.6 Staff Welfare Expenses ………………………………………………………………………………………………… 4
2.3.7 Medical Expenses ……………………………………………………………………………………………………….. 4
2.3.8 Human Resource Development Expenses………………………………………………………………………….. 4
2.4 O
VERHEAD EXPENSES (SECTION 13) …………………………………………………………………………………………. 4
2.4.1 Preliminary Expenses …………………………………………………………………………………………………… 4
2.4.2 Research & Development …………………………………………………………………………………………….. 5
2.4.3 General Office Expenditure ……………………………………………………………………………………………. 5
2.4.4 Insurance Premium ………………………………………………………………………………………………………. 5
2.4.5 Maintenance & Repair Costs …………………………………………………………………………………………. 5
2.4.6 Hire of Plant, Machinery & Vehicles ……………………………………………………………………………….. 6
2.4.7 Rent of Land & Buildings ………………………………………………………………………………………………. 6
2.4.8 Municipal and Motor Vehicle Tax ……………………………………………………………………………………. 6
2.4.9 Trade Licence Registration & Renewal Fees …………………………………………………………………….. 6
2.4.10 Legal & Professional Fees/Expenses ……………………………………………………………………………….. 6
2.4.11 Annual Membership Fees & Subscriptions ………………………………………………………………………… 6
2.4.12 Interest on Loans ………………………………………………………………………………………………………… 6
2.5 S
ALES & MARKETING EXPENSES (SECTION 14) ……………………………………………………………………………. 7
2.5.1 Commission ……………………………………………………………………………………………………………….. 7
2.5.2 Entertainment …………………………………………………………………………………………………………….. 7
2.5.3 Publicity & Advertisement …………………………………………………………………………………………….. 7
2.6 B
AD DEBTS (SECTION 15) …………………………………………………………………………………………………….. 7
2.6.1 Bad debts up to Nu. 25,000 per Debtor …………………………………………………………………………… 7
2.6.2 Bad debts exceeding Nu. 25,000 per Debtor …………………………………………………………………….. 8
2.7 M
ISCELLANEOUS AND GENERAL EXPENSES (SECTION 16) …………………………………………………………………. 8
2.7.1 Accidental Loss ………………………………………………………………………………………………………….. 8
2.7.2 Stock Obsolescence …………………………………………………………………………………………………….. 8
2.7.3 Stock Shortages …………………………………………………………………………………………………………. 8
2.7.4 Bhutan Sales Tax (BST)/Customs Duty ……………………………………………………………………………. 8
2.7.5 Carriage & Freight Charges …………………………………………………………………………………………… 8
2.7.6 Donations ………………………………………………………………………………………………………………….. 8

Page ii Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
2.8 C ARRY FORWARD AND OFFSET OF LOSSES (SECTION 17) …………………………………………………………………. 9
2.9 A
SSETS ACQUIRED THROUGH GRANT …………………………………………………………………………………………. 9
2.10 I
MMOVABLE LEASED ASSETS ………………………………………………………………………………………………….. 9
2.11 L
EASE RENT …………………………………………………………………………………………………………………… 10
2.12 D
EDUCTIONS NOT ALLOWED FOR TAX PURPOSES (SECTION 18) ………………………………………………………… 10
3 RULE NO. 3 DEDUCTIONS AND CARRY FORWARD OF LOSS BY THE DEBTOR WHEN THE
DEBT IS FORGIVEN (CHAPTER 5, SECTION 20) ………………………………………………………………………….. 10
4 RULE NO.4 DEPRECIATION (CHAPTER 6) ……………………………………………………………………….. 10
4.1 D
EPRECIATION OF FIXED ASSETS ……………………………………………………………………………………………. 11
4.2 M
AINTENANCE & REPAIR OF FIXED ASSETS ………………………………………………………………………………. 11
4.3 F
IXED ASSET ADDITIONS …………………………………………………………………………………………………….. 11
4.4 F
IXED ASSET DISPOSALS …………………………………………………………………………………………………….. 12
4.5 A
PPRECIATION OF FIXED ASSETS …………………………………………………………………………………………… 12
4.6 L
OSS OF FIXED ASSETS DUE TO THEFT , FIRE AND NATURAL CALAMITIES ……………………………………………… 12
4.7 D
EPRECIATION RATES ………………………………………………………………………………………………………… 12
5 RULE NO. 5 RATES & CALCULATION OF INCOME TAX (CHAPTER 9, SECTION 46) ……………. 12
5.1 C
ALCULATION OF TAX ………………………………………………………………………………………………………… 12
5.2 T
IME LIMIT FOR PAYMENTS …………………………………………………………………………………………………. 12
5.3 A
DJUSTMENT OF PROVISIONAL TAXES …………………………………………………………………………………….. 12
5.4 I
NTEREST ON OUTSTANDING TAX …………………………………………………………………………………………… 13
6 RULE NO. 6 REGISTRATION OF TAXPAYERS AND FILING OF TAX RETURN (CHAPTER 10) … 13
6.1 T
AX REGISTRATION (SECTION 47) …………………………………………………………………………………………. 13
6.2 C
HANGE OF REGISTRATION FROM ONE RRCO TO ANOTHER …………………………………………………………….. 13
7 RULE NO. 7 FILING OF INCOME TAX RETURN (SECTION 48) ……………………………………………. 14
8 RULE NO. 8 CORRECTION OF TAX RETURN (SECTION 51) ……………………………………………….. 14
8.1 P
OSTPONEMENT OF FILING …………………………………………………………………………………………………… 14

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page iii
PART II

BUSINESS INCOME TAX

1 RULE NO. 1 BUSINESS UNDER THE SAME OWNERSHIP (SECTION 8) ……………………………… 15
2 RULE NO. 2 RATES & CALCULATION OF INCOME TAX (SECTION 13) ……………………………… 15
2.1 C
ALCULATION OF TAX ………………………………………………………………………………………………………… 15
2.2 T
IME LIMIT FOR PAYMENTS …………………………………………………………………………………………………. 15
2.3 A
DJUSTMENT OF PROVISIONAL TAXES …………………………………………………………………………………….. 15
2.4 I
NTEREST ON OUTSTANDING TAX …………………………………………………………………………………………… 16
3 RULE NO. 3 TAX REGISTRATION (SECTION 14) ……………………………………………………………… 16
3.1 R
EGISTRATION ………………………………………………………………………………………………………………… 16
3.2 C
HANGE OF REGISTRATION FROM ONE RRCO TO ANOTHER …………………………………………………………….. 16
4 RULE NO. 4 FILING OF INCOME TAX RETURN (SECTION 15) ……………………………………………. 16
5 RULE NO. 5 CORRECTION OF TAX RETURN (SECTION 18) ………………………………………………. 17
5.1 P
OSTPONEMENT OF FILING …………………………………………………………………………………………………… 17

Page iv Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
PART III

PERSONAL INCOME TAX

1 RULE NO. 1 TAX LIABILITY (CHAPTER 1)………………………………………………………………………. 18
1.1 L
IABILITY TO TAX (SECTION 1) ……………………………………………………………………………………………… 18
1.2 C
ITIZEN ………………………………………………………………………………………………………………………… 18
1.3 R
ESIDENT ……………………………………………………………………………………………………………………… 18
1.4 A
NY OTHER PERSON HAVING PERSONAL INCOME FROM SOURCES IN BHUTAN ………………………………………… 19
1.5 T
AXATION IN THE CASE OF INCOME OF A DECEASED PERSON , MARRIED COUPLES AND MINORS (SECTION 2) ……. 19
1.5.1 Income of Deceased Persons ……………………………………………………………………………………….. 19
1.5.2 Married Couples ………………………………………………………………………………………………………… 19
1.5.3 Minor ……………………………………………………………………………………………………………………… 19
1.6 M
EMBERS OF DIPLOMATIC MISSION AND CONSULAR POSTS (SECTION 3) ……………………………………………. 20
1.7 E
XEMPTION FROM TAX ………………………………………………………………………………………………………. 20
2 RULE NO. 2 INCOME LIABLE TO TAX (CHAPTER 3) …………………………………………………………. 20
2.1 S
ALARY INCOME FROM EMPLOYMENT (SECTION 5) ……………………………………………………………………… 20
2.1.1 Payment of Tax ………………………………………………………………………………………………………… 21
2.2 R
ENTAL INCOME FROM REAL PROPERTY ……………………………………………………………………………………. 21
2.2.1 Specific Deductions/Exemption(s) …………………………………………………………………………………. 21
2.2.2 Exemption from Tax …………………………………………………………………………………………………… 22
2.2.3 Payment of Tax ………………………………………………………………………………………………………… 22
2.3 D
IVIDEND INCOME …………………………………………………………………………………………………………….. 22
2.3.1 Specific Deductions …………………………………………………………………………………………………… 22
2.3.2 Specific Exemption ……………………………………………………………………………………………………. 22
2.3.3 Payment of Tax ………………………………………………………………………………………………………… 22
2.4 I
NTEREST INCOME FROM FIXED DEPOSITS (SECTION 9) …………………………………………………………………. 23
2.4.1 Specific Exemption ……………………………………………………………………………………………………. 23
2.4.2 Payment of Tax ………………………………………………………………………………………………………… 23
2.5 I
NCOME FROM CASH CROP (SECTION 10) …………………………………………………………………………………. 23
2.5.1 Specific Deductions …………………………………………………………………………………………………… 23
2.5.2 Payment of Tax ………………………………………………………………………………………………………… 23
2.6 I
NCOME FROM OTHER SOURCES (SECTION 11) ……………………………………………………………………………. 24
2.6.1 Specific Deduction …………………………………………………………………………………………………….. 24
2.6.2 Payment of Tax ………………………………………………………………………………………………………… 24
3 RULE NO. 3 GENERAL DEDUCTIONS (SECTION 12) ………………………………………………………….. 24
3.1 I
NSURANCE PREMIUM ………………………………………………………………………………………………………… 24
3.2 D
ONATIONS ……………………………………………………………………………………………………………………. 25
3.3 E
DUCATION ALLOWANCE …………………………………………………………………………………………………….. 25
4 RULE NO. 4 NET TAXABLE INCOME (SECTION 13) …………………………………………………………… 25
5 RULE NO. 5 TAX RATES (SECTION 14) …………………………………………………………………………… 26
6 RULE NO. 6 SET OFF AND CARRY FORWARD (SECTION 15) ……………………………………………. 26
6.1 A
DJUSTMENT OF TDS AND TAXES PAID QUARTERLY ……………………………………………………………………. 26

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page v
6.2 S ET OFF ……………………………………………………………………………………………………………………….. 26
6.3 C
ARRY FORWARD OF LOSSES ………………………………………………………………………………………………… 26
7 RULE NO. 7 REGISTRATION OF TAXPAYERS AND FILING OF TAX RETURN (CHAPTER 4) …. 27
7.1 T
AX REGISTRATION (SECTION 16) …………………………………………………………………………………………. 27
7.2 C
HANGE OF REGISTRATION FROM ONE RRCO TO ANOTHER …………………………………………………………….. 27
7.3 C
ANCELLATION OF PIT REGISTRATION ……………………………………………………………………………………… 27
7.4 F
ILING OF INCOME TAX RETURN …………………………………………………………………………………………….. 28
7.5 P
ERSONS OTHER THAN CITIZENS OR RESIDENTS ………………………………………………………………………….. 28
7.6 C
ORRECTION OF TAX RETURN ………………………………………………………………………………………………. 28
7.7 P
OSTPONEMENT OF FILING …………………………………………………………………………………………………… 28
7.8 P
AYMENT OF TAX …………………………………………………………………………………………………………….. 28

Page vi Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
GENERAL PROVISION

1 RULE NO. 1 ASSESSMENT (CHAPTER 2) ……………………………………………………………………… 29
1.1 A
SSESSMENT AUTHORITY (SECTION 3) ……………………………………………………………………………………. 29
1.2 D
ESK ASSESSMENT …………………………………………………………………………………………………………… 29
1.3 F
IELD ASSESSMENT ………………………………………………………………………………………………………….. 29
1.4 E
STIMATED ASSESSMENT …………………………………………………………………………………………………… 30
1.5 R
EASSESSMENT ………………………………………………………………………………………………………………. 30
1.6 F
INES AND PENALTIES (CHAPTER 5) ………………………………………………………………………………………… 31
2 RULE NO. 2 TRANSFER AND CLOSURE OF BUSINESS (SECTION 6) …………………………………. 31
2.1 W
INDING UP OF COMPANY ……………………………………………………………………………………………………. 31
2.2 T
RANSFER AND CLOSURE OF BUSINESS ……………………………………………………………………………………. 31
2.1.1 Change of Business Ownership …………………………………………………………………………………….. 31
2.1.2 Business Closure ……………………………………………………………………………………………………….. 31
3 RULE NO. 3 COLLECTION (CHAPTER 3) …………………………………………………………………………… 31
3.1 C
OLLECTION AUTHORITY …………………………………………………………………………………………………….. 31
3.2 P
AYMENT OF TAX …………………………………………………………………………………………………………….. 31
3.2.1 Taxes paid during the income year ………………………………………………………………………………… 32
3.2.2 Tax Deducted at Source (TDS) …………………………………………………………………………………….. 32
3.2.3 Tax Paid when Filing Annual Tax Return ………………………………………………………………………… 35
4 RULE NO. 4 INFORMATION, CONTROL AND DOCUMENTATION (CHAPTER 4) …………………… 35
4.1 C
OMPANIES , LARGE AND MEDIUM BUSINESS UNITS ……………………………………………………………………… 35
4.2 S
MALL , COTTAGE /M ICRO BUSINESS UNITS ……………………………………………………………………………….. 35
4.3 I
NFORMATION FROM THIRD PARTIES ……………………………………………………………………………………….. 36
5 RULE NO. 5 RECOVERY MEASURES (CHAPTER 6) …………………………………………………………. 36
5.1 G
ENERAL ………………………………………………………………………………………………………………………. 36
5.1.1 Agreement ……………………………………………………………………………………………………………….. 36
5.1.2 Restraint on Asset …………………………………………………………………………………………………….. 36
5.1.3 Executing Bond …………………………………………………………………………………………………………. 36
5.1.4 Detention of Assets …………………………………………………………………………………………………… 36
5.1.5 Adjustment of Auction Proceeds against Tax Dues…………………………………………………………… 37
5.1.6 Suspension and Cancellation of Business License …………………………………………………………….. 37
6 RULE NO 6 TAX CLEARANCE CERTIFICATE ……………………………………………………………………. 37
6.1 I
SSUE OF TAX CLEARANCE CERTIFICATE …………………………………………………………………………………… 37

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page vii
FORMS

CORPORATE INCOME TAX

FORM CIT-1 CIT REGISTRATION ………………………………………………………………………………………. 38
FORM CIT-2 ANNUAL CORPORATE INCOME TAX RETURN ………………………………………………….. 40
FORM CIT 2 CIT STANDARD ACCOUNTS FORMAT ………………………………………………………………. 41

BUSINESS INCOME TAX
FORM BIT-1 BIT REGISTRATION ……………………………………………………………………………………….. 52
FORM BIT-2 ANNUAL BUSINESS INCOME TAX RETURN…………………………………………………….. 54
FORM BIT 2 BIT STANDARD ACCOUNTS FORMAT………………………………………………………………. 55

PERSONAL INCOME TAX
FORM PIT-1 PIT REGISTRATION ………………………………………………………………………………………. 66
FORM PIT-2 PERSONAL INCOME TAX RETURN …………………………………………………………………. 69

GENERAL PROVISIONS
FORM IT-1 MONTHLY SALARY SCHEDULE ………………………………………………………………………….. 80
FORM IT-2 INCOME FROM REAL PROPERTY …………………………………………………………………….. 82
FORM IT-3 INCOME FROM DIVIDEND ………………………………………………………………………………….. 84
FORM IT-4 INCOME FROM INTEREST ………………………………………………………………………………….. 86
FORM IT-5 INCOME FROM OTHER SOURCES ……………………………………………………………………. 87
FORM IT-6 TDS FROM TOUR INCOME …………………………………………………………………………………. 89
FORM IT-7 SCHEDULE OF TDS REMITTANCE FROM CONTRACTORS ……………………………………….. 90
FORM IT-8 RESTRAINING ORDER ……………………………………………………………………………………. 92

ANNEXURES
ANNEXURE I
CATEGORIZATION ………………………………………………………………………………………… 94
ANNEXURE II
DEPRECIATION SCHEDULE ……………………………………………………………………………. 95
ANNEXURE III TDS SCHEDULE FOR MONTHLY SALARY INCOME ……………………………………….. 97

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 1
In exercise of powers conferred by the Income Tax Act of the Kingdom of Bhutan, 2001 (ACT), the
Ministry of Finance (Ministry) hereby frames the following Rules on Corporate Income Tax (CIT),
Business Income Tax (BIT) and Personal Income Tax (PIT).

The Rules have been framed only where the Ministry of Finance is empowered by the Act. All
references to Parts and Sections in these Rules pertain to the Act and must be read together with
the Act.

These Rules shall supercede all previous Circulars, Notifications, and Rules governing Corporate,
Business and Personal Income Tax and shall come into force from 1
st January 2005.

PART I
CORPORATE INCOME TAX (CIT)

1 Rule No.1 Tax Holidays and Incentives (Chapter 3, also applicable to Part II: BIT)
The Ministry of Finance may announce, from time to time, such tax holidays and tax incentives and
prescribe the conditions and procedures thereof, in the interest of the public and in line of the
government policy in vogue.

2 Rule No. 2 Allowable Deductions (Chapter 4, also applicable to Part II: BIT)
2.1 General Principle
Deductions shall be allowed for tax purposes if proper books of accounts are maintained as per the
provisions under Rule No. 4 of the General Provisions.

In order to qualify as an allowable deduction an expense must be incurred solely and exclusively for the
purpose of the business and transactions done on an arm’s length basis*. All expenses must be
supported by objective evidences such as purchase invoices, money receipts or other legally valid
documents.

Where only part of an expense has been incurred for the purpose of business or company, then only
that part of the expenses shall be allowed as a deduction in the calculation of taxable profit.

Any expenses charged in excess of the limits prescribed under these Rules shall be added back to Net
Profit and subject to tax.

Allowable deductions are grouped into the following broad categories:
ƒ Direct Costs
ƒ Employment Expenses
ƒ Overhead Expenses
ƒ Sales & Marketing Expenses
ƒ Bad debts
ƒ Miscellaneous/General Expenses.
ƒ Fixed Assets & Depreciation
ƒ Interest Payments

*Arms length’s basis mean transactions at the prevailing market conditions and where there is no conflict of interest.

Page 2 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
2.2 Direct Costs (Section 11)
All direct costs incurred solely for the purpose of the business and associated with the operation of the
enterprise are allowable deductions. Direct costs are those costs, which can be directly attributed to
the generation of income. e.g. raw materials purchased by manufacturing industries.

2.3 Employment Expenses (Section 12)
Employment expenses means salary, wages, labour permit fees and allowances paid in money or
money’s worth to an employee in relation to his or her employment and includes pay and any benefits
provided free of cost or at a concessional rate by an employer.

2.3.1 Salary
Salary means pay, allowances and includes benefits provided free of cost or at a concessional rate to
an employee who is employed full time in the business.

Salary shall be allowed as deductible expense only to the maximum ceiling prescribed below and on the
fulfilment of the following conditions:

ƒ All information and documentary evidence are available regarding the payment of salary,
ƒ The employee is a regular employee of the company or business,
ƒ The employee is actually working with the company or business and
ƒ The employee is actually located at the appropriate place of work.

(per month)
Category BIT
Large 30,000
Medium 20,000
Small 15,000
Cottage/micro 5,000
Note:
a. The salary limits shall not apply to incorporated companies with effect from the 1
st of January
2003.
b. The above limits may be enhanced for technical experts and highly professional employees with
the prior approval of the Ministry.
c. The categorisation of companies and businesses shall be as per categorisation given in Annexure
I.

2.3.2 Wages
Wages means payments made to an individual who is not a regular employee of an organisation.

2.3.3 Benefits
Benefits means benefits provided by an employer to its employee such as education facilities,
accommodation, domestic services, holiday trips, tiffin allowances, telephone facilities, medical
benefits. Benefits shall be treated as tax-deductible expenses provided that it is clubbed under salary
and is within the prescribed limits. Such benefits shall be valued at the actual cost incurred by the
employer, or as agreed in the Service Manual of the organisation or in accordance with the
employment contract. If actual costs incurred apply to more than one employee, the total cost shall be
allocated on a pro rata basis.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 3
Benefits provided free of cost or at a concessional rate to an employee should be valued as follows:
a) Accommodation
Accommodation provided free or at a concessional rate by an employer to its employee is a
deductible expense if it is within the salary limit prescribed in Rule No.2.3.1 Valuation of
accommodation shall be:
ƒ The actual cost incurred by the employer in providing the accommodation, or 30% of the
employee’s basic salary if the cost cannot be determined.
ƒ The actual concessional rate provided to the employee, or 30% of the employee’s salary less
the rent being charged by the employer if the cost cannot be determined.
b) Domestic Service
Domestic services provided by an employer to its employee is a deductible expense if it is within
the prescribed salary limit. The valuation of domestic services provided free of cost should be
done on the actual cost incurred by the employer in providing the service.
c) Gas, Electricity and Water Supplies
Gas, electricity and water supplies provided free or at a concessional rate to an employee is a
deductible expense. The valuation of such benefits shall be the actual cost incurred by the
employer in providing such benefits. Where the cost cannot be determined, 2% of the employee’s
basic salary shall be taken as the cost of the benefits.
d) Conveyance or Transport Facility
Conveyance or transport facility provided free or at a concessional rate to an employee is a
deductible expense. Valuation of such benefits shall be the actual cost incurred by the employer
in providing such benefits.

However, bus services provided for daily transport of staff to work place shall not form part of
the salary.

e) Telephone facilities
Telephone facilities provided to an employee is a deductible expense. The value of such benefit
shall be the actual cost incurred by the employers in providing the facilities to the employee.

However, where such benefits cannot be segregated between private and business use, 50% of
the total expense shall be treated as benefits for PIT purposes.

2.3.4 Bonus
The term ‘bonus’ includes all incentives or productivity related payments made to an employee.
Bonuses paid shall be allowed as a deduction subject to fulfilment of the following conditions:

a) The amount is reasonable with regard to the employee’s pay and conditions of service,
b) The amount is consistent with the practice in other similar enterprises and
c) The total bonus payable is limited to 10% of the assessed net profit or 2 months basic pay per
employee, whichever is lower.
However, in the case of a business not registered under the Companies Act, bonus paid to a business
proprietor, partner, or their immediate family (father, mother, spouse or children) shall not be allowed
as deduction for tax purposes.

Page 4 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
2.3.5 Contribution to Provident Fund and Gratuity Fund
Contributions made by an employer to the Provident Fund & Gratuity Fund for the benefit of the
employees are allowable deductions subject to the following conditions:

a) Such contributions are invested with a financial institution in a separate account as PF and GF
Account and
b) The limits to be applied to this expenditure must be consistent with the Service Manual of the
company or business. If no such Service Manual exists, then the Civil Service Rules shall apply.
In cases where the eventual pay out to the employee upon his or her retirement is less than the
guaranteed amount in the Service Manual, any additional amount contributed thereof by the employer
to make up the guaranteed amount shall be allowed as deduction. Contributions not payable due to
termination of services shall be added back to the Net profit and subject to tax.

2.3.6 Staff Welfare Expenses
Staff welfare expenses means provision of canteen and recreational facilities to employees within the
business premises and shall be allowed on an actual basis.

2.3.7 Medical Expenses
Medical expenses for treatment of an employee shall be allowed as deduction subject to the following
conditions:

a) Medical expenses are in respect to an employee only;
b) Prior recommendation must be obtained from the Referral Committee of the Health Ministry
for treatment outside Bhutan and
c) Maximum expenses allowed shall be the actual cost of the treatment up to a maximum limit of
Nu. 50,000 per annum per employee.

2.3.8 Human Resource Development Expenses
Expenses incurred for Human Resource Development of employees shall be allowed as deductible
expense provided such expenses are incurred for the purpose of upgrading and developing the
employees’ craft, supervisory and technical skills or increasing the productivity or quality of its
products.

If such expenses exceed 1% of the assessed turnover, then the full expenditure must be spread equally
over a period of three years starting from the year the expense is incurred.

2.4 Overhead Expenses (Section 13)
2.4.1 Preliminary Expenses
Preliminary expenses mean all legitimate expenses incurred prior to the commencement of a business
or in connection with the extension of an existing business. Such expenses incurred may be spread
equally and allowed as deduction over the first 3 years of operation. Examples of these expenses
include feasibility studies, market surveys, engineering services, project reports, and legal fees.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 5
2.4.2 Research & Development
Research and development is defined as “use of scientific or technical know-how” to produce new or
substantially improved materials, mechanisms, products, processes, systems or services. Research and
development shall be allowed as deduction subject to the following conditions:

a) Research and development cost not exceeding 2% of the assessed turnover will be allowed as a
deductible expense;
b) Research and development cost exceeding 2% of the assessed turnover will be treated as capital
expenditure. The full amount of the cost will be capitalised and depreciated in three subsequent
years immediately following the income year and
c) Any cost of buying machinery, inventory, stock in trade and immovable property acquired for the
use of research and development shall be depreciated in accordance with the ordinary rules of
depreciation as referred to under Rule No. 4of this Part.

2.4.3 General Office Expenditure
The following items of general expenditure incurred for the purpose of the business shall be treated as
allowable deductions:

ƒ Printing & stationery;
ƒ Postage & telegram expenses;
ƒ Telephone, trunk call & telex charges;
ƒ User charges;
ƒ Administrative fees and charges;
ƒ Any other expenses of similar nature.

2.4.4 Insurance Premium
Insurance premium paid for any assets owned by an enterprise is an allowable deduction, provided that
the asset is owned/registered and used for the purpose of the business.

Insurance premium paid for employees to protect against occupational risks and hazards at their work
place shall be allowed as deduction.

2.4.5 Maintenance & Repair Costs
Maintenance & repair costs refer to current repairs of buildings and other assets owned and used for
the purpose of the business. The asset must be shown in the balance sheet and included in the
taxpayer’s fixed asset register.

Current repair costs refers to any cost incurred to maintain the asset in a consistent working
condition, without changing the nature of the asset. Only current repair costs shall be treated as
revenue expenditure.

Major repair/enhancement work that modifies or significantly improves the asset, such that the original
nature of the asset is altered, must be treated as capital expenditure and depreciated accordingly.

Where a taxpayer purchases an asset, but that asset requires additional expenditure to bring it to a
useable condition, such additional expenditure must be capitalised as part of the cost of the asset.

Page 6 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
Where a worn out asset is replaced with a new asset, the cost of the new asset must be capitalised.

Where an asset is upgraded, i.e. its nature is fundamentally altered, the associated cost must be
capitalised.

2.4.6 Hire of Plant, Machinery & Vehicles
The hire cost of plant, machinery and vehicles plus any associated costs referred to in the lease
agreement shall be treated as an allowable deduction, provided that the expenditure is incurred for the
purpose of business and the services are availed from another tax entity.

2.4.7 Rent of Land & Buildings
Rental of property used for business purposes along with associated costs referred to in the lease
agreement shall be treated as an allowable deduction, provided that the expenditure is incurred for the
purpose of business and the services are availed from another tax entity.

2.4.8 Municipal and Motor Vehicle Tax
Municipal and motor vehicle tax shall be allowed as tax deductions provided that the asset is owned
and used for the purpose of business. However, motor vehicles tax paid by licensed/registered
transport companies/businesses shall be adjusted against their final tax liability.

2.4.9 Trade Licence Registration & Renewal Fees
Trade licence registration and renewal fees are allowable deductions. However, this provision only
applies to fees related to trade licenses issued and renewed by Ministry of Trade and Industry (MTI).
All other fees that are sometimes referred to as ‘license fees’ including auction rights such as liquor
licence fees, mining rights are not covered under this provision, and are not allowed as deductions.

2.4.10 Legal & Professional Fees/Expenses
All fees and expenses related to legal and professional work carried out on behalf of an enterprise for
the purpose of business are allowed as deductions.

2.4.11 Annual Membership Fees & Subscriptions
Any membership fees paid or subscriptions made to any organisation or association relevant to the
business shall be allowed as deductions.

2.4.12 Interest on Loans
Interest on loans shall be allowed as deductions subject to the conditions and procedures prescribed
below:

a) Loans are taken from a recognised financial institution and within the maximum limit of debt
equity ratio of 3:1, i.e. the total borrowings for tax purposes shall not exceed thrice the paid up
capital of the company;
Borrowings include all types of capital loans (e.g. debentures, term loans etc.), plus any working
capital borrowings (e.g. bank overdrafts).
Capital includes paid up share capital (CIT taxpayers) or owners’ investment (BIT taxpayers), plus
any retained profit reserves.
b) The loan must be taken in the name of the companies/business and for the purpose of the said
business;

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 7
c) Interest paid on loans transacted between holding and subsidiary companies at prevailing market
conditions is an allowable deduction provided it is shown as income of the recipient company;
d) Interest paid prior to the commissioning of a project (or commencement of a business) shall be
capitalised, and depreciated as part of the asset and
e) Interest paid on security deposits shall be treated as taxable income in the books of the recipient
company, and as an expense for the company making the payment.

2.5 Sales & Marketing Expenses (Section 14)
Sales and marketing expenses means expenses incurred for promotion of sales and include expenses
such as commission, entertainment, publicity, advertisement etc.

2.5.1 Commission
Commission paid on purchase transactions is an allowable deduction as it forms part of the purchase
payment for goods or services. However, such commissions must be clearly stated in the
documentation relating to the purchase.
Commission paid to a sales agent is an allowable deduction provided that the commission is clearly
stated in all relevant bills, invoices and cash memos, or a special agreement in writing between the
parties exists and is properly recorded in the books of accounts.

2.5.2 Entertainment
Entertainment expenses refer to hospitality and gifts provided to existing or potential clients or
customers, agents or suppliers. Entertainment expenses directly related to sales promotion of the
business shall be allowed as deductions on actual expenses or 2% of the assessed Net Profit,
whichever is lower.

2.5.3 Publicity & Advertisement
Publicity expenses such as printing of brochures and advertisement through media and magazines shall
be allowed as deductions on an actual basis or 2% of the assessed Gross Income, whichever is lower.

2.6 Bad Debts (Section 15)
Bad debts shall be allowed as deductions subject to the fulfilment of the following conditions:

2.6.1 Bad debts up to Nu. 25,000 per Debtor
A bad debt of Nu. 25,000 or less per debtor shall be allowed as deduction on the fulfilment of the
following conditions:

a) Tax has been paid on such debts in a previous year;
b) The debt is not less than 5 years old and
c) Bad debt shall be incorporated as income if recovered in the subsequent years or
d) Where the debtor is declared bankrupt under the Bankruptcy Act of the Kingdom of Bhutan or
e) Scheme of arrangement is made under the supervision of a judge.
In the case of financial institutions, bad debts below Nu.100,000 per debtor may be written off if the
conditions above are met.

Page 8 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
2.6.2 Bad debts exceeding Nu. 25,000 per Debtor
Bad debts exceeding Nu. 25,000 per debtor shall be allowed as deductions on the fulfilment of the
following conditions:

a) Tax has been paid on such debts in a previous year,
b) Judicial recourse has been exhausted in respect of the debt, and
c) Bad debt shall be incorporated as income if recovered in the subsequent years, or
d) Where the debtor is declared bankrupt under the Bankruptcy Act of the Kingdom of Bhutan, or
e) Scheme of arrangement is made under the supervision of a Judge.

2.7 Miscellaneous and General Expenses (Section 16)
2.7.1 Accidental Loss
Accidental loss means loss due to events such as theft, fire, earthquake, flood and road accidents.
Documentary evidences such as police report and Court order must support accidental losses, if
applicable. Accidental losses for the purpose of taxation shall be treated as follows:

a) Revenue losses shall be allowed as deductions and revenue receipts/compensation as taxable
income.
b) Capital losses shall be treated as per Rule No. 4.6 of this Part.

2.7.2 Stock Obsolescence
Stock obsolescence shall not be allowed as deductions unless the obsolescence is due to unforeseen
circumstances and the taxpayer was not in a position to avoid it. Conditions to be fulfilled for the
above exceptions are:

a) Maintenance of a proper stock inventory register and
b) Proper records showing disposal and sale of the obsolete stock.

2.7.3 Stock Shortages
Stock shortages due to unavoidable circumstances within an industry average shall be allowed as
deductions subject to maintenance of proper book of accounts. Shortages due to negligence shall not
be allowed as deductions for tax purposes.

2.7.4 Bhutan Sales Tax (BST)/Customs Duty
BST or Customs Duty paid on assets shall be capitalised and depreciated as per Rule No. 4 of this
Part.

However, BST collected on sale of domestic goods and services such as BST on hotels, restaurant,
beer, cement and entertainment services shall not be allowed as deductions.

2.7.5 Carriage & Freight Charges
Carriage and freight expenses incurred for business purposes shall be allowed as deductions.
However, such charges incurred for initial transportation of fixed assets to its place of use shall be
capitalised and depreciated accordingly.

2.7.6 Donations
1. Donations made to organisations exempted by the Ministry shall be allowed as deductions subject
to the condition that such donation is supported by relevant documents.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 9
2. Further donations for purposes such as;
a) A Relief Fund for natural calamites in Bhutan.
b) For the preservation and promotion of Religion and Culture in Bhutan
c) For the promotion of Sports, Educational and Scientific activities in Bhutan.

Shall be allowed as deductions, subject to the condition that such purposes have the approval of
the Government/Ministry and is supported by the relevant documents.

Note:
However the total donation under point 1 and 2 of this section shall be allowed as tax deductible
expenditure upto a maximum limit of 5% of the assessed Net Profit.

2.8 Carry Forward and Offset of Losses (Section 17)
Losses sustained during an income year can be carried forward and adjusted against future profits of
the same business for a maximum period of 3 years.
Once a loss has been used to reduce taxable profits, it cannot be used again in future years.
In all cases, losses of one company cannot be used to offset the taxable Net profit of another
company.
Record of losses carried forward must be maintained and submitted along with the Income Tax
Return.

2.9 Assets acquired through Grant
Receipt of grants whether in cash or in kind from the government or from a donor directly or through
the government indirectly shall be taxed as follows:

a) Revenue related grants received for day-to-day functioning of the organisation shall be treated as
taxable income and all expenses related to such grants shall be allowed as deductions.
b) Receipt of capital related grants shall not be subject to tax and expenses incurred in relation to
capital related grants (including depreciation) shall not be allowed as deductions. Capital grants,
for the purpose of these Rules, means grants received in kind in the form of land, building, plant
and machinery, equipment, vehicles, tools, etc or in cash to purchase land, building, plant and
machinery, equipment, vehicles, tools, working capital such as stock and raw materials.
However, direct expenses including depreciation shall be allowed as deduction provided:
ƒ The grant is treated as capital reserves at comparable costs in the case of fully owned
government corporations.
ƒ The grant is treated as capital/equity contribution of the government and shares of
equivalent value are issued to the government in the case of partially owned government
corporations.
ƒ The grant is treated as loan from the government as per terms and conditions prescribed by
the Ministry of Finance in the case of private companies/businesses.

2.10 Immovable Leased Assets
Assets owned, fixtures erected, and substantial improvements made on leased land shall be, for the
purpose of these Rules, deemed to be owned by the lessee subject to the fulfillment of the following
conditions.

Page 10 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
a) There should be a valid lease agreement executed between the lessor and the lessee, and the
agreement should be for a term period extending more than five years.

b) Depreciation shall be allowed only to the extent of investment made by the lessee.

c) The lessee, on expiry of the lease, shall be deemed to have disposed of such fixtures and
improvements, gains on which shall be taxable, and losses deductible.

d) The lessor after the expiry of the lease shall be allowed to be depreciated on such improvements or
fixtures provided consideration equivalent to such assets have been paid to the lessee, and registered
as the lessors’ assets.

2.11 Lease Rent
Lease rent payable by a lessee to a lessor as consideration for the property leased is a deductible
expense. The payment of lease rent in lump sum amount must be spread evenly over the period of the
lease, while payment of lease rent on an annual basis shall be as per the amount scheduled in the
lease agreement.

2.12 Deductions not Allowed for Tax Purposes (Section 18)
The following are examples of expenses not allowed as deductions:

ƒ Personal expenses on food, clothing, marriage etc. These expenses are not for the purpose of the
business.
ƒ Personal administrative fees of employees and their families (e.g. identity cards, citizenship cards,
etc.). These expenses are not for the purpose of the business.
ƒ Payments of dividend or profit distributions to share holders, partners and proprietors.
ƒ Creation of or adjustments to reserves except in specific cases.
ƒ Creation of provisions for bad debts/advances except for financial institutions.
ƒ Life and/or health insurance premiums, except for schemes that have been approved by RGOB.
ƒ Business Income Tax, Corporate Income Tax and Personal Income Tax.
ƒ Penalties, fines, penal interest, forfeiture, etc.
ƒ Donations other than those authorised by the Ministry.
ƒ Interest on loans from private sources.
ƒ Interest on loans taken to pay dividend.

3 Rule No. 3 Deductions and Carry Forward of loss by the debtor when the debt is forgiven
(Chapter 5, Section 20)
When a debt is forgiven by a creditor, both the debtor and creditor shall make the following
adjustments in the books of accounts:

a) Debtor cannot carry forward as a loss the forgiven amount.
b) Where conditions laid down in Section 19, Chapter 5, Part I of the Income Tax Act of the
Kingdom of Bhutan, 2001 are not fulfilled, the creditor cannot treat the forgiven debt as a loss.
Such debt shall be added back to the taxable Net Profit.

4 Rule No.4 Depreciation (Chapter 6)
Fixed assets, for the purpose of these Rules, are assets that are intended for use within the enterprise
on a continuous basis for more than one accounting period.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 11
4.1 Depreciation of Fixed Assets
The Rules regarding depreciation of fixed assets are as follows:

a) Depreciation on assets purchased and owned by the taxpayer and used for the purpose of the
business, except antiques, works of art and land, will be allowed as deduction, subject to the
maximum depreciation rates prescribed in Annexure II.
b) Depreciation shall be calculated on the Straight Line Method (SLM) on an asset at the end of the
year.
c) Assets purchased during the year shall be depreciated on a pro rata basis from the date of
purchase.
d) Assets disposed off during the year shall not be depreciated in the year of disposal and the
difference between the sale proceeds and the written down value at the beginning of the year
shall be declared in the profit and loss account.
e) Small assets costing up to Nu. 25,000 in total per taxpayer in each income year may be written
off. e.g. calculator, blow/rod heater, fans and the like.
f) Maintenance of an asset register for all types of assets is mandatory, and must include details of
each individual fixed asset owned by the business or company.
g) Fully depreciated assets that are still in use must be recorded in the asset register at a value of
Nu.1 for identification purposes.
The depreciation rates given in Annexure II are the maximum limits allowed. Where a taxpayer applies
a lower depreciation rate than that prescribed in Annexure II, the taxpayer will be permitted to make
a clear adjustment on the tax return. However, if this adjustment is not made, the tax officer will not
be responsible for increasing the depreciation claim on the taxpayer’s behalf, and should accept the
lower amount charged in the accounts.

Where business premises are closed for a considerable period or more then 180 days in one income
year, no depreciation of assets will be allowed during that time.

In order to claim depreciation, the following conditions must be fulfilled:

ƒ The asset must be purchased and registered in the name of the business or company.
ƒ The asset must be intended exclusively for use of the business or company.
ƒ Proper books of accounts must be maintained, including a complete fixed asset register
containing details of each individual asset for which depreciation is claimed.
ƒ Where the asset is only partially used by the business, then only an appropriate portion of the
depreciation can be charged for tax purposes.

4.2 Maintenance & Repair of Fixed Assets
Expenses for the maintenance and repair of fixed assets are classed as operating expenses and should
be written off in the year the work is carried out. However, if the maintenance or repair substantially
enhances the value of an asset then that expenditure shall be capitalised and depreciated accordingly.

4.3 Fixed Asset Additions
Where a new asset is purchased and delivered during the income year, depreciation must be charged
on a pro rata basis.

Page 12 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
4.4 Fixed Asset Disposals
When a fixed asset is sold, the profit earned or loss sustained is part of the taxable Net profit or loss
of the business or company. The correct profit or loss on disposal is calculated by deducting the net
book value of the asset from the actual sales proceeds. Where disposal is not as per market
conditions, a tax officer shall have the right to determine the residual value.

4.5 Appreciation of Fixed Assets
If the revaluation of the assets of a business, result in a higher value than that previously shown in the
accounts, then the increase in value must be declared as taxable income in the profit and loss account.
However where no depreciation is claimed on this increased value, in the profit and loss account, then
the increase in value of the asset need not be declared as taxable income in the profit and loss account
also.

4.6 Loss of Fixed Assets due to Theft, Fire and Natural Calamities
Loss of fixed assets due to theft, fire and natural calamities such as earthquake and flood may be
written off in the books of accounts. The value of the asset to be written off shall be equivalent to
the written down value as on 31
st December of the previous year. No depreciation shall be allowed on
such fixed assets in the year that it is written off.

4.7 Depreciation Rates
Depreciation shall be allowed every income year up to the maximum rates prescribed in Annexure II.

5 Rule No. 5 Rates & Calculation of Income Tax (Chapter 9, Section 46)
5.1 Calculation of Tax
All companies registered under the Companies Act of the Kingdom of Bhutan shall pay Corporate
Income Tax (CIT) at the rate of 30% of the Net profit. Net profit for the purpose of calculating the tax
shall be the Gross income minus the allowable deductions under these Rules.

5.2 Time Limit for Payments
All companies shall pay their tax on a self-declared basis to the Regional Revenue & Customs Office
(RRCO) before the 31
st March following the end of the income year (1 st January to 31 st December).
However, provisional taxes paid by way of tax deducted at source (TDS) and advance tax shall be
paid as per Rules No. 3.2.1, 3.2.2and 3.2.3 of the General Provisions.

5.3 Adjustment of Provisional Taxes
Advance tax, taxes paid on a quarterly basis and Taxes deducted at source shall be adjusted in the
following manner:
b) Advance Tax shall be adjusted at the time of filing of tax return against provisional tax payable
provided accounts are submitted.
c) Taxes paid on a quarterly basis shall be adjusted at the time of filing of tax return provided
revenue receipts are produced.
d) TDS shall be adjusted
ƒ At the time of advance tax payment;
ƒ At the time of provisional tax payment;
ƒ At the time of final tax payment.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 13
provided accounts have been submitted (BIT/CIT taxpayers) and TDS certificates produced
(BIT/CIT/PIT taxpayers)
Provisional taxes paid in excess of final taxes shall be refunded as per Section 23 of General Provisions
of the Income Tax Act of the Kingdom of Bhutan, 2001.

5.4 Interest on Outstanding Tax
Any taxes not paid to the RGOB shall result in fines and penalties at the rate of 24% per annum from
the due date.

6 Rule No. 6 Registration of Taxpayers and Filing of Tax Return (Chapter 10)
6.1 Tax Registration (Section 47)
All companies shall register with the RRCO where its registered Head Office is located within 3
months from the date of its incorporation.

Registration must be done with the nearest RRCO by using FORM CIT-1.

Location of RRCOs and their area or jurisdiction are indicated below:

Sl. No. Regional Revenue &
Customs Office Dzongkhags
1 Thimphu Thimphu, Punakha, Wangdue Phodrang and Gasa
2 Phuentsholing Chukha
3 Samtse Samtse
4 Gelephu Sarpang, Tsirang, Dagana, Zhemgang, Bumthang and Trongsa
5 Samdrup Jongkhar Samdrup Jongkhar, Trashigang, Pema Gatshel, Lhuenstse, Tashi
Yangtse and Mongar
6 Paro Paro and Haa

Upon receipt of FORM CIT-1, the RRCO shall register and allocate a Tax Payer Number (TPN) to the
company. The TPN number allotted shall be used to identify all transactions of the company and must
be quoted as a reference in all correspondences with the Department.

6.2 Change of Registration from One RRCO to Another
Registration must be changed from one RRCO to another on submission of a written application by a
taxpayer no later than 2 months before the end of the income year.

The concerned RRCO must convey the decisions in writing within one month from the date of receipt
of application.

Permission may be given if the location of the business has moved to another region.

Where permission for transfer of a taxpayer’s registration from one RRCO to another is given, the unit
must obtain a Tax Clearance Certificate (FORM CIT-4) from the previous RRCO, showing the old
registration details and tax status. The old TPN and RRCO must be recorded for references. The
previous RRCO shall be responsible for submitting a copy of all tax records to the new RRCO.

Page 14 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
7 Rule No. 7 Filing of Income Tax Return (Section 48)
All companies must submit their return, on a self-assessed basis, to the RRCO of registration before
the 31
st March following the end of the income year.

Tax return must have the following documents:
ƒ Annual Corporate Income Tax Return as per FORM CIT-2.
ƒ Annual Accounts as per Rule No. 4of the General Provision
ƒ Evidence of any taxes paid in instalments or TDS as per Rule No. 5.3 of this Part.

Failure to file the income tax return as required shall result in fines and penalties as per Chapter 5 of
the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

8 Rule No. 8 Correction of Tax Return (Section 51)
A taxpayer may correct their tax return within 15 days from the date of submission of tax return on
genuine grounds and reasons acceptable to the RRCO. The correction of returns shall be limited to
arithmetical errors and accounts heads and must be applied in writing to the Regional Director.

8.1 Postponement of Filing
Where a taxpayer is unable to submit the tax return within the due date, the Regional Director of the
concerned RRCO may extend the time limit up to 31
st May provided that:

ƒ The taxpayer submits written request for extension before 20
th March.

ƒ Postponement of filling shall not postpone the payment of tax. In such case, the taxpayer shall
make a suitable provisional tax payment equal to tax paid in the previous year or the self-
estimated tax, which whichever is higher.

Request for extension beyond 31
st May shall be forwarded by the RRCO to the DRCHQ. DRCHQ may
extend the time limit up to 31 st August, in exceptional cases, provided the request is received by RRCO
within the 20 th of May.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 15
PART II
BUSINESS INCOME TAX (BIT)

In addition to Rules under this Part, Rules framed for Part I of the Act shall also be applicable to Part
II until and unless it is specifically excluded.

1 Rule No. 1 Business under the Same Ownership (Section 8)
Where a taxpayer owns several businesses under the trading sector, each business shall be treated as a
separate or independent taxable entity, and the losses incurred in one taxable entity cannot be offset
against the profit of another entity.

Businesses under the manufacturing and service sector may be treated as one taxable entity
irrespective of their geographical locations provided that the following conditions are fulfilled:

ƒ Registered as a single tax entity under the same ownership.
ƒ Same activity under the manufacturing and service sector.
ƒ Consolidated accounts are submitted.

2 Rule No. 2 Rates & Calculation of Income Tax (Section 13)
2.1 Calculation of Tax
All businesses shall pay Business Income Tax (BIT) at the rate of 30% of the Net profit. Net profit for
the purpose of calculating the tax shall be the Gross income minus the allowable deductions. Deductions
shall be allowed as per Rule No.2, Part I of these Rules.

2.2 Time Limit for Payments
All businesses shall pay their tax on a self-declared basis to the RRCO of registration before the 31
st
March following the end of the income year (1 st January to 31 st December). However, provisional
taxes paid by way of TDS and tax paid quarterly shall be paid as per Rule No. 3 of the General
Provisions.

2.3 Adjustment of Provisional Taxes
Advance tax, taxes paid on a quarterly basis and TDS shall be adjusted in the following manner:

a) Advance Tax shall be adjusted at the time of filing of tax return against provisional tax payable
provided accounts are submitted.
b) Taxes paid on a quarterly basis shall be adjusted at the time of filing of the tax return provided
revenue receipts are produced.
c) TDS shall be adjusted
ƒ At the time of advance tax payment;
ƒ At the time of provisional tax payment;
ƒ At the time of final tax payment;
provided accounts have been submitted (BIT/CIT taxpayers) and TDS certificates produced
(BIT/CIT/PIT taxpayers)
Provisional taxes paid in excess of final tax shall be refunded as per Section 23 of General Provisions
of the Income Tax Act of the Kingdom of Bhutan, 2001.

Page 16 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001

2.4 Interest on Outstanding Tax
Any taxes not paid to the RGOB shall result in fines and penalties at the rate of 24% per annum from
the due date.

3 Rule No. 3 Tax Registration (Section 14)
3.1 Registration
All businesses are required to be registered with the RRCO from where trade license or permit is issued
or wherever the Head Office is located, within 3 months from the date of obtaining such a trade
license or permit.

Registration shall be done with the nearest RRCP by using FORM BIT-1.

Location of RRCO and their areas of jurisdiction are indicated below:

Upon receipt of FORM BIT-1, RRCO shall register and allocate a Tax Payer Number (TPN) to the
business. The TPN number allotted shall be used to identify all tax transactions relating to that
taxpaying unit and must be quoted as a reference in all correspondences with the Department.

3.2 Change of Registration from One RRCO to Another
Registration may be changed from one RRCO to another on submission of a written application by a
taxpayer no later than 2 months before the end of the income year.

The concerned RRCO must convey the decisions in writing within one month from the date of receipt
of application.

Permission may be given if the location of the business has moved to another region.

Where permission for transfer of a taxpayer’s registration from one RRCO to another is given, the unit
must obtain a Tax Clearance Certificate FROM BIT-4 from the previous RRCO, showing the old
registration details and tax status. This certificate must be submitted to the new RRCO before a new
TPN cane be obtained. The old TPN and RRCO must be recorded for reference. The previous RRCO is
responsible for submitting a copy of all tax records to the new RRCO.

4 Rule No. 4 Filing of Income Tax Return (Section 15)
All businesses must submit their tax return, on a self-assessed basis, to the concerned RRCO before the
31
st March following the end of the income year.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 17
Tax return must have the following documents:
ƒ Annual Business Income Tax Return as per FORM BIT-2.
ƒ Annual Accounts as per Rule No. 4 of the General Provisions.
ƒ Evidences of any taxes paid in instalments or TDS as per Rule No. 2.3 of this Part.
ƒ Such income tax should bear the name, signature, seal and address of the accountant who
has prepared the accounts.

Failure to file the income tax returns as required shall result in fines and penalties as per the
provisions under Chapter 5 of the General Provisions of the Income Tax Act f the Kingdom of
Bhutan, 2001.

5 Rule No. 5 Correction of Tax Return (Section 18)
A taxpayer may correct is unable to submit the tax return within the tax return within 15 days from the
date of submission of tax return on genuine ground and reasons acceptable to the RRCO. The correction
of returns shall be limited to arithmetical errors and accounts heads and must be applied in writing to
the Regional Director.

5.1 Postponement of Filing
Where a taxpayer is unable to submit the Tax Return within the due date, the Regional Director of the
concerned RRCO may extend the time limit up to 31
st May provide that::

ƒ The taxpayer submits a written request for extension before the 20
th March.
ƒ Postponement of filing shall not postpone the payment of tax. In such case, the taxpayer shall
make a suitable provisional tax payment equal to tax paid in the previous year or the self
estimated tax, which ever is higher.

Page 18 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
PART III
PERSONAL INCOME TAX (PIT)

Definitions
a) Gross Income means total income from a particular income source before specific
deduction(s)/exemption.
b) Specific Deduction(s)/Exemption(s) means deductions/exemption(s) allowable against a
specified source of income.
c) Total Gross Income means total income from all sources under PIT before specific
deductions/exemption(s).
d) Adjusted Gross Income means gross income after allowing specific deduction(s)/exemption.
e) Total Adjusted Gross Income means total of the adjusted gross income(s) from all income
sources.
f) General Deductions means deductions allowable against total adjusted gross income to arrive
at Net Taxable Income.
g) Net Taxable Income means total adjusted gross income after allowing general deductions. Tax
rates are applied to Net Taxable Income to arrive at the Tax Amount.

1 Rule No. 1 Tax Liability (Chapter 1)
1.1 Liability to Tax (Section 1)
Persons having personal income exceeding Nu. 100,000 per annum shall be liable to be taxed
under Personal Income Tax (PIT). Personal income means income derived from the following
sources:

ƒ Salary income from employment and non-licensed consultancy fees (refer Rule No. 2.1of this
Part).
ƒ Rental income from real property (refer Rule No. 2.2 of this Part).
ƒ Dividend income from shareholdings (refer Rule No. 2.3 of this Part).
ƒ Interest income from fixed deposits (refer Rule No. 2.4 of this Part).
ƒ Cash crop income from apple, orange and cardamom orchards (refer Rule No. 2.5 of this
Part).
ƒ Income from other sources (refer Rule No. 2.6of this Part).

1.2 Citizen
Citizen means an individual possessing the citizenship of the Kingdom of Bhutan.

1.3 Resident
Resident means any person whose stay in the Kingdom of Bhutan during an income year is equal
to or more than 6 months. Income year means the calendar year starting 1
st January and ending
31st December.

Any person whose stay in the Kingdom is less than 6 months in an income year shall be covered
under Rule No. 1.4 of this Part.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 19
1.4 Any Other Person having Personal Income from Sources in Bhutan
Any person not a citizen or a resident but having personal income from sources in Bhutan or for
the work performed in Bhutan shall be liable to pay PIT. Income from sources in Bhutan means
income earned from taxable sources in Bhutan or income earned for work performed in Bhutan.

1.5 Taxation in the Case of Income of a Deceased Person, Married Couples and Minors
(Section 2)
Income of deceased persons, married couples and minors shall be taxed according to the following
procedures:

1.5.1 Income of Deceased Persons
Where a person dies during the income year, his legal representative shall be liable to pay any
income tax or other sum payable, which the deceased would have been liable to pay, in the same
manner and to the same extent. The legal representative shall for the purpose of personal income
tax, be deemed to be an assessee. However before deeming the legal representative of the
deceased to be an assessee, a notice to that effect would have to be obtained from the concerned
court and submitted to and approved by the Department.

The legal representative is liable for all liabilities of the deceased person, upto the extent to which
the estate of the deceased is capable of meeting the liability and only until the estate of the
deceased person has been administered to the legal heirs.

Where no legal representative has been appointed for the deceased person, any beneficiary
enjoying the income of the deceased shall be liable to pay income tax.

1.5.2 Married Couples
Married couples shall be taxed separately. Income earned from joint ownership of assets shall be
divided equally unless otherwise specified in a written agreement.

1.5.3 Minor
Minor means an individual below 18 years of age.

a) Income of a minor shall be clubbed with one of the parents’ income for the purpose of
determining personal income. A minor’s income may be clubbed with either one of the
parents’ incomes provided both the parents have taxable sources of income. Where only one
of the minor’s parents has a taxable source of income, the minor’s income shall be clubbed
with that parent.
However once a minor has clubbed his or her income with either one of the parents, then
they will not be allowed to club their income with the other parent, in subsequent years.
b) Where a minor has a guardian appointed by the Court, the minor’s income shall be taxed
separately. Responsibility for filing the tax returns and payment of tax shall be on the
guardian appointed by the Court.
c) A minor having personal income from property inherited by way of will shall be taxed
separately. Properties inherited by way of will means any property inherited by will from a
deceased person and where parents or guardians appointed by the Court have no right to sell,
transfer or dispose of the property.

Page 20 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
1.6 Members of Diplomatic Mission and Consular Posts (Section 3)
Notwithstanding the provisions under Section 3, Part III of the Income Tax Act of the Kingdom of
Bhutan, 2001 the following shall be liable for PIT:

a) Bhutanese citizens working in Bhutan for Diplomatic Missions and International
Organisations, e.g. UN Agencies and donor/externally supported projects.
b) Persons other than Bhutanese citizens not covered under fiscal privileges of members of
Diplomatic Missions or Consular Posts under the General Provisions of International Law or
persons under the provision of special agreements.

1.7 Exemption from Tax
A religious institution or organisation, charitable institution, trust body, trust fund or a body of
persons shall be exempt from PIT provided the following conditions are fulfilled:

ƒ Such organisations are approved by the government and established in the Kingdom of
Bhutan.
ƒ Is not operated or conducted for profit.
ƒ Is established exclusively for religious worship or advancement of religion or for charitable
purposes and or is in the interest of the general public.
ƒ Management and control is done through a board consisting of minimum three members.
ƒ Proper books of accounts are maintained.

To avail of tax exemptions, such organisations are required to be registered with the Department
and shall furnish any relevant information to the tax authorities or any other authorised agency of
the Government on written request.

2 Rule No. 2 Income Liable to Tax (Chapter 3)
2.1 Salary Income from Employment (Section 5)
Salary means pay, wages, allowances, remuneration, leave encashment, share of profit received
by an employee and includes benefits received free or at a concessional rate. Salary income shall
be taxed on an accrual basis.

Gross salary income means a total of pay, wages, sitting fees, allowances, bonus, commission,
and benefits as valued under Rule No. 2.3.3 of Part I.

Adjusted Salary Income shall be the same as the Gross Salary Income.

Where an individual earns salary income from more than one employer during the same income
year, all salaries shall be added to the Gross Salary Income. Consultancy fees received by a non-
licensed consultant shall be treated as salary and be subject to tax.

However, the following incomes shall be excluded from the computation of salary income provided
they are within government rates:

ƒ Leave travel concession.
ƒ Travel allowances and daily allowances given while on tours.
ƒ Transfer grants and transportation costs given on transfers.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 21
ƒ Foreign Allowance and Representational Grant given to the civil servants of the Royal
government employees stationed outside the country.

2.1.1 Payment of Tax
Tax shall be deducted at source (TDS) by the employer at the rate prescribed in Annexure III in
accordance with the procedures laid down in Rule No. 3.2.2 (a) of the General Provisions.
Where an employer is not under any legal obligation to deduct tax at source from its employees,
the individual, i.e. the employee, shall be responsible for paying tax as per rates prescribed in
Annexure III to the RRCO on a quarterly basis.
For citizens and residents, TDS or tax paid on a quarterly basis shall be adjusted against their final
tax liability at the time of filing the tax return. For persons other than a citizen and resident, TDS
or tax paid by the individual on a quarterly basis shall be treated as final tax and returns need not
be filed.

2.2 Rental Income from Real Property
Real property means land, building, houses, factory buildings, warehouses and any other
structures earning rental income. Rental income from real property shall be taxed on an accrual
basis.
Gross Rental Income means total rental income from real property during an income year before
specific deduction(s)/exemption.
Adjusted Gross Rental income means Gross Rental Income from real property after specific
deductions/exemptions mentioned under Rule No. 2.2.1 of this Part.

2.2.1 Specific Deductions/Exemption(s)
The following expenses shall be allowed as deductions from rental income:

ƒ Interest paid on borrowings provided that the loan
9 Is in the name of the taxpayer (property owner);
9 Is taken for the purpose of construction or purchase or expansion of the real
property generating rental income and these are specifically stated in the loan
documents;
9 Is taken from a recognised financial institution; and
9 Is supported by relevant documents.
ƒ 20% of the Gross Rental Income shall be allowed as deductions for repairs and maintenance
expenses.
ƒ Actual municipal taxes and urban house taxes paid, if supported by documents such as
money receipts.
ƒ Insurance premium paid to a recognised insurance company, if supported by documents.

Exceptions
The above deductions shall not be allowed for self-occupied units and for real property not
generating rental income. However, in the case of property remaining vacant up to a period of
three months in an income year the above deductions shall be allowed provided the conditions laid
down under Rule No. 2.2.2 of this Part, are fulfilled.

Page 22 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
2.2.2 Exemption from Tax
a) One dwelling unit used for self-occupation shall be exempt from tax. However, in the case
of married couples only one unit shall be exempted.
b) Any property remaining vacant shall be exempted from PIT subject to the fulfilment of the
following conditions:
ƒ The property has remained vacant and there was no rental income.
ƒ The RRCO of registration has been informed in writing of the property remaining vacant
within fifteen days.
ƒ Documentary proof to let out the said property is produced.
Property kept vacant and not covered under (a) and (b) above shall be deemed as property let out
and rent will be calculated on the fair market price.

2.2.3 Payment of Tax
Government, Semi Government, NGOs, Companies or Business entities shall withhold TDS at the
rate of 5% on the gross rental income payments made by them as per Rule No. 3.2.2 (b) of the
General Provisions.
Where rental income is received from persons other than those mentioned above, individuals
receiving the income shall be responsible for declaring at the time of filing.
TDS shall be adjusted against their final tax liability at the time of filing the tax return.

2.3 Dividend Income
Dividend income means any income earned from holding of shares in a company registered in
Bhutan. However, such income does not include dividends received in the form of bonus shares.
Dividend shall be taxed on a receipt basis.

Gross Dividend income means total dividend income during an income year before specific
deduction(s)/exemption.

Adjusted Dividend Income means gross dividend income after specific deductions as mentioned
under Rules No. 2.3.1and 2.3.2 of this Part.

2.3.1 Specific Deductions
Interest paid on borrowings shall be allowed as deductions provided that the loan:

ƒ Is in the name of the taxpayer (shareholder);
ƒ Is taken for the purchase of shares and this is specifically stated in the loan document;
ƒ Is taken from a recognised financial institution; and
ƒ Is supported by relevant documents.

2.3.2 Specific Exemption
Total Dividend Income up to Nu. 10,000 per annum per taxpayer shall be exempted.

2.3.3 Payment of Tax
A company paying dividend to its shareholders shall at the time of payment deduct tax on dividend
income at source as per rates prescribed below and deposit to the concerned RRCO in accordance
with Rule No. 3.2.2(c) of the General Provisions.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 23

Citizens or residents Dividend Nu. 10,000 or below No deductions
Dividend Nu. 10,001 & above 10% of the Total Dividend Income
Person other than citizens
or residents 10% on the Total Dividend Income as final tax and tax returns need
not be filed.

2.4 Interest Income from Fixed Deposits (Section 9)
Interest income means interest earned from fixed deposits held with a financial institution in
Bhutan. Interest income shall be taxed on a receipt basis.

Gross Interest Income means total interest income during an income year before specific
exemption.

Adjusted Interest Income means gross interest income after specific deductions/exemption
mentioned under Rule No. 2.4.1 of this Part.

2.4.1 Specific Exemption
Total interest income up to Nu.10,000 per annum per taxpayer from fixed deposits shall be
exempted.

2.4.2 Payment of Tax
A financial institution paying interest to its clients shall deduct tax on interest income at source at
the rate of 5% at the time of payment or at the time the interest is credited to the client’s account
as per rates prescribed below, and shall deposit to the concerned RRCO in accordance with Rule
No. 3.2.2(d) of the General Provisions.

Citizens or residents Interest Nu. 10,000 or below No deductions
Interest Nu. 10,001 & above 5% of Total Interest Income
Person other than
citizens or residents 5% on the Total Interest Income as final tax and tax returns need not
be filed.

2.5 Income from Cash Crop (Section 10)
Income from cash crop means income from apple, orange and cardamom orchards. Income from
cash crop shall be taxed on an accrual basis.

Gross Income from Cash Crop means total income from cash crops during an income year before
specific deduction(s).

Adjusted Gross Income from Cash Crop means gross income from cash crop after specific
deductions as mentioned under Rule No. 2.5.1 of this Part.

2.5.1 Specific Deductions
30% of the Gross Income from Cash Crop shall be allowed as deduction.

2.5.2 Payment of Tax
Payment of tax on income from cash crop shall be at the time of filing the tax return.

Page 24 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
2.6 Income from Other Sources (Section 11)
Income from other sources means income derived from the following sources:

ƒ Income from hire of privately owned vehicles, but excluding trucks and taxis.
ƒ Income from hire of privately owned plant and machinery.
ƒ Income from intellectual property rights.
Intellectual property means income from copyrights, patent, trademark, design, model or any
artistic or scientific work. Income from other sources shall be taxed on an accrual basis.

Gross Income from Other Sources means total income from other sources during an income year
before specific deductions/exemption.

Adjusted Gross Income from Other Sources means gross income from other sources after specific
deductions /exemption mentioned under Rule No. 2.6.1 of this Part.

2.6.1 Specific Deduction
30% of the Gross Income from Other Sources shall be allowed as deductions.

2.6.2 Payment of Tax
Government, Semi Government, NGOs, Companies or Business entities shall withhold TDS at the
rate of 5% on the gross income from other sources on payments made by them as per Rule No.
3.2.2(e) of the General Provisions.

Where income from other sources is paid by persons other than those mentioned above, individuals
receiving the income shall be responsible for declaring the income so received, at the time of filing.

For citizens and residents TDS shall be adjusted against their final tax liability at the time of filing
the tax return. For persons other than a citizens or residents, TDS shall be treated as final tax and
returns need not be filed.

3 Rule No. 3 General Deductions (Section 12)
General Deductions shall be given from the Total Adjusted Gross Income in the manner prescribed
below:

3.1 Insurance Premium
Insurance premium paid to a recognised Insurance Company in Bhutan for the insurance of a
taxpayer’s life under the following schemes shall be allowed as deduction:

1. Whole Life Insurance Policy
2. Silver Jubilee Term Insurance
3. Term Insurance

However, in respect of the below mentioned Insurance schemes covering both life and savings;
only 50% of the premium paid shall be allowed as deductions subject to a maximum premium of
Nu.50,000 per annum per taxpayer:

1. Double Endowment
2. Double Cover Endowment

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 25
3. Education Annuity
4. Children Anticipated Policy
5. Endowment Assurance
6. Money Back Policy
7. Ashi Nangsa Living Policy
8. Millennium Education Policy
9. Endowment Assurance Plan for Minors

3.2 Donations
Donations made to organisations exempted by the Ministry shall be allowed as deductions upto a
limit of 5% of the Total Adjusted Gross income and subject to the condition that such donations
are supported by relevant documents.

Further donations for purposes such as;
i. A Relief Fund for natural calamities in Bhutan.
ii. For the preservation and promotion of Religion and Culture in Bhutan and
iii. For the promotion of Sports, Educational and Scientific activities in Bhutan,

shall be allowed as deductions, subject to the condition that such purposes have the approval of
the Government/Ministry, is supported by the relevant documents and such donations are less
than 5% of the Adjusted Gross income.

3.3 Education Allowance
Education allowance for dependent children (own or legally adopted), being the actual cost of
education incurred outside Bhutan, shall be allowed as deductions from total adjusted Gross
Income up to a maximum limit of Nu. 50,000 per child provided the claim is supported by relevant
document.

Education allowance for dependent children (own or legally adopted), being the actual cost of
education incurred within Bhutan, shall be allowed as deduction up to a maximum limit of Nu.
50,000 provided the claim is supported by relevant documents or as per limits prescribed by the
Ministry provided the proof of a child attending school is produced. The limit referred above shall
be prescribed annually by the Ministry.

Both Parents cannot claim the allowance for the same dependent child.

4 Rule No. 4 Net Taxable Income (Section 13)
Net Taxable Income means the Total Adjusted Gross Income from the following personal incomes
after general deductions:

a) Gross salary income;
b) Rental income from real property after specific deduction(s)/exemption under Rules No.
2.2.1and 2.2.2 of this Part;
c) Dividend income from shareholdings after specific deduction(s)/exemption under Rules
No. 2.3.1and 2.3.2 of this Part;
d) Interest income from fixed deposits after specific deduction(s) under Rule No.2.4.1of
this Part;

Page 26 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
e) Income from cash crop after specific deduction(s) under Rule No.2.5.1of this Part;
f) Income from other sources after specific deduction(s) under Rule No.2.6.1of this Part.
Citizens and residents shall be taxed on the Net Taxable Income arrived from (a), (b), (c), (d), (e),
and (f) after general deductions under Rule No. 3 of this Part. The tax rates and slabs given under
Rule No. 5 of this Part shall be applied on Net Taxable Income to calculate the Tax Amount.

5 Rule No. 5 Tax Rates (Section 14)
The Net Taxable Income as per Rule No. 4 of this Part shall be liable for PIT as per the rates given
below.

Sl. No. Net Taxable Income Tax rates
1 Where the Net Taxable Income does not exceed
Nu. 100,000 Nil
2 Where the Net Taxable Income exceeds Nu.
100,000 but does not exceed Nu. 250,000. 10% on the amount by which the Net Taxable
Income exceeds Nu. 100,000
3 Where the Net Taxable Income exceeds Nu.
250,000 but does not exceed Nu. 500,000. Nu. 15,000 plus 15% on the amount by which
the Net Taxable Income exceeds Nu. 250,000
4 Where the Net Taxable Income exceeds Nu.
500,000 but does not exceed Nu. 1,000,000. Nu. 52,500 plus 20% on the amount by which
the Net Taxable Income exceeds Nu. 500,000
5 Where the Net Taxable Income exceeds Nu.
1,000,000 Nu. 152,500 plus 25% on the amount by which
the Net Taxable Income exceeds Nu. 1,000,000

6 Rule No. 6 Set Off and Carry Forward (Section 15)
6.1 Adjustment of TDS and Taxes Paid Quarterly
TDS and tax paid quarterly for the purpose of PIT shall be adjusted as follows:

a) TDS and tax paid quarterly from salary income, rental income, dividend income, interest
income and income from other sources shall be adjusted against the Tax Amount at the time
of filing for a citizen and a resident as per Rule No. 3of the General Provisions.
b) For a person other than a citizen or a resident, TDS and taxes paid quarterly shall be treated
as final PIT and such persons shall not be required to file income tax return.

6.2 Set Off
Set off and adjustment of personal income for the computation of Net Taxable Income shall be as
follows:
Deficit from one income may be adjusted against another income provided the incomes are from
the same source. Example: deficit from rental income of one property may be adjusted against the
rental income from another house.
Deficit from one source shall not be adjusted against the income from another source.
Example: Deficit from rental income will not be allowed to be adjusted against the income from
salary or any other source.
Deficit means specific deductions/exemption exceeding the Gross Income.

6.3 Carry Forward of Losses
Carry forward of loss or deficit from one income year to another or adjustment against the
income of the subsequent year shall not be allowed under PIT.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 27
7 Rule No. 7 Registration of Taxpayers and Filing of Tax Return (Chapter 4)
7.1 Tax Registration (Section 16)
All citizens above 18 years of age and residents having personal income from one or more of the
sources during an income year shall register as per the procedures given below:

a) The PIT registration FORM PIT-1 may be obtained from any RRCO.
b) The completed form shall be submitted at the earliest to any of the RRCOs mentioned below.
A person must mention in the Registration Form the RRCO where he/she would like to be
registered as a taxpayer. This may be any one of the RRCOs where the person has a source of
income.
c) Married couples must choose the same RRCO for registration.
d) Citizen ID No./Resident Permit Number issued by the Department of Immigration and Census
shall be used as the key identification number for registration and must be used as a reference
for all future tax transactions.

Location of RRCOs and their area of jurisdiction are indicated below:
Sl.No. Regional Revenue &
Customs Office Dzongkhags
1 Thimphu Thimphu, Punakha, Wangdue Phodrang and Gasa
2 Phuentsholing Chukha
3 Samtse Samtse
4 Gelephu Sarpang, Tsirang, Dagana, Zhemgang, Bumthang, and
Trongsa.
5 Samdrup Jongkhar Samdrup Jongkhar, Trashigang, Pema Gatshel,
Lhuenstse, Tashi Yangtse and Mongar
6 Paro Paro and Haa

7.2 Change of Registration from One RRCO to Another
Registration may be changed from one RRCO to another on submission of a written application by
a taxpayer, no later than 2 months before the end of the income year.

The concerned RRCO must convey the decisions in writing within one month from the date of
receipt of application. Permission may be given if the location of the business has moved to
another region.

Where permission for transfer of a taxpayer’s registration from one RRCO to another is given, the
unit must obtain a Tax Clearance Certificate from the previous RRCO, showing the old registration
details and tax status. This certificate must be submitted to the new RRCO before a new TPN
number can be obtained. The old TPN number and RRCO must be recorded for reference. The
previous RRCO shall be responsible for submitting a copy of all tax records to the new RRCO.

7.3 Cancellation of PIT Registration
For PIT purposes cancellation of registration takes place when a person dies or migrates. In such
cases, an authorised representative or the taxpayer shall inform the concerned RRCO and obtain a

Page 28 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
Tax Clearance Certificate. A Tax Clearance Certificate shall be issued to the taxpayer by the
RRCO.

7.4 Filing of Income Tax Return
All citizens above 18 years of age and residents having taxable personal income as mentioned
under Rule No. 1.1 of this Part or their authorised representatives or persons claiming refund shall
file the tax return as per FORM PIT-2 at the RRCO of registration before 1
st March following the
income year.

All tax return forms must contain full and correct information regarding the income and deductions
and must be accompanied by relevant documents such as money receipts and TDS certificates for
adjustment of TDS and taxes paid half yearly/quarterly.

Failure to file the income tax return as required shall result in fines and penalties as per Chapter 5
of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

7.5 Persons other than Citizens or Residents
Any person not a citizen or a resident but having personal income from sources in Bhutan or from
work performed in Bhutan, TDS paid shall be treated as the final PIT and tax returns need not be
filed. Where taxes have not been deducted at source, such person shall be required to file the tax
return like a citizen or resident.

7.6 Correction of Tax Return
Taxpayers may correct their tax return within 15 days from the date of submission of tax return
on genuine grounds and reasons acceptable to the RRCO. The correction of returns shall be limited
to arithmetical errors and accounts heads and must be applied in writing to the Regional Director.

7.7 Postponement of Filing
Where a taxpayer is unable to submit the tax return within the due date, the Regional Director of
the concerned RRCO may extend the time limit up to 1
st May provided that:

ƒ The taxpayer submits a written request for extension before 20
th February for PIT.
ƒ Postponement of filing shall not postpone the payment of tax. In such cases, the taxpayer
shall make a suitable provisional tax payment equal to or more than the tax paid in the
previous year.
Request for extension beyond 1
st May shall be forwarded by the RRCO to the DRCHQ. DRCHQ
may extend the time limit up to 1st August, in exceptional cases.

7.8 Payment of Tax
All companies, businesses, citizens or residents shall pay PIT on a self-declared basis at the time
of filing the tax return. TDS/tax paid half yearly or quarterly shall be adjusted against the tax
liability and any payment in excess shall be refunded as per Section 23 of the General Provisions
of the Income Tax Act of the Kingdom of Bhutan, 2001.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 29
GENERAL PROVISIONS

The Rules under this Part shall be applicable to all taxpayers be they under Corporate Income
Tax, Business Income Tax or Personal Income Tax.

1 Rule No. 1 Assessment (Chapter 2)
1.1 Assessment Authority (Section 3)
The Department of Revenue and Customs through its Regional Revenue and Customs Offices shall
be responsible for assessment of taxes.

All companies (FORM CIT-2), businesses (FORM BIT-2) and individuals (FORM PIT-2) shall
submit their tax returns on a self-declared basis to the RRCO where they are registered as a
taxpayer. Upon receipt of the tax return, the RRCO may carry out the assessment in one or more
of the following ways:

1.2 Desk Assessment
Desk assessment shall be carried out when the tax return is submitted or within 90 days
thereafter. Desk assessment shall include a logical check, an arithmetical check on the figures
submitted, and a ‘reasonableness’ check on the level of self-declared tax. If any error or omission
is found, the tax officer has the right to reject the tax return but shall collect the tax based on the
self-declaration. In such case, the taxpayer shall be informed in writing stating clearly the reasons
for rejection.

On completion of desk assessment, the RRCO may issue a demand notice for CIT, BIT units and
for PIT taxpayers showing the full tax liability, any tax payments made and the balance payable.
Any additional tax due/payable after the due date of filing (CIT/BIT on 31
st March and PIT on 1 st
March) shall result in fines and penalties at the rate of 24% per annum.

1.3 Field Assessment
If the desk assessment is not satisfactory, a field assessment may be carried out. Where a field
assessment is required, the taxpayer shall be informed of the field assessment at least 2 weeks
before the commencement of the field assessment. A field assessment must be completed within
2 years from the submission of tax returns. Reasons for field assessment may be:
ƒ The desk assessment suggested missing or inadequate documentation.
ƒ The desk assessment suggested that either adjustment or refund of provisional taxes is
required.
ƒ Loss incurred under normal circumstance and declared in the tax return.
ƒ Where field assessment of the unit has not been carried out for the last 3 years.
Field assessment is completed by the RRCO as follows:
ƒ Where no further tax liability is identified as a result of the assessment process, the tax
officer shall issue a final assessment notice, indicating that no further tax payment is
required for that income year.

Page 30 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
ƒ Where an assessment results in an additional tax liability, a final assessment notice and
demand notice for CIT, BIT units and for PIT taxpayers shall be issued showing the full tax
liability, any tax payments made and the balance payable.
ƒ Where an assessment results in a reduced tax liability, the excess tax paid will be refunded,
provided that the following conditions have been fulfilled:
9 All outstanding tax assessments have been completed and finalised.
9 There are no outstanding taxes, fines and penalties and interest against the unit or other
units under the same ownership. Excess taxes refundable shall be adjusted against
outstanding taxes if not already recovered.
9 There are no outstanding debts to the RGOB.
Adjustments against other outstanding taxes can be made at the RRCO level, but actual monetary
refunds must always be authorised by DRCHQ.

Any additional tax due/payable after the due date of filing (CIT/BIT on 31
st March, PIT on 1 st
March) shall result in a penal interest at the rate of 24% per annum.

1.4 Estimated Assessment
A tax officer shall make an estimated assessment in the following cases:
ƒ Tax return has not been submitted within the prescribed time limit and no time extension
request has been made and approved.
ƒ A tax return has been rejected during desk assessment, and a valid re-submission has not
been received.
ƒ A business or company has failed to keep proper accounting records as required under Rule
No. 4 of this Part.

Estimated assessment shall be based on one or more of the following:
ƒ Tax returns filed for the last three years.
ƒ Import and export figures available with the Department.
ƒ Information from third parties such as customers.
ƒ Taxes paid by other similar units.
ƒ Taxes paid on an estimated basis in the previous year plus an appropriate increase.
ƒ Any other information available on the taxpayer.

Estimated assessment is completed by the RRCO as follows:

The tax officer shall issue a demand notice as per for CIT, BIT units and for PIT taxpayers,
showing the full tax liability, any tax payments made and the balance payable. The demand notice
must clearly state the basis upon which the estimated assessment was finalised.

Any additional tax due/payable after the due date of filing (CIT/BIT on 31
st March, PIT on 1 st
March) shall result in a penal interest at the rate of 24% per annum.

1.5 Reassessment
A reassessment may take place at any time within 5 years from the end of the income year, and
shall be on any of the following grounds:

ƒ Upon request from a taxpayer as a part of the appeal procedure.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 31
ƒ Upon request from the tax authorities where an appeal case cannot be concluded without
further investigation.
ƒ Upon request from a RRCO or DRCHQ where there are reasonable grounds.
Reassessment is completed by the RRCO as mentioned in Rule No.1.3 above.

Any additional tax due/payable after the due date of filing (CIT/BIT on 31
st March, PIT on 1 st
March) shall result in a penal interest at the rate of 24% per annum.

1.6 Fines and Penalties (Chapter 5)
Failure to comply with the above Rules No. 1.2 to 1.5 shall result in fines and penalties as
mentioned in Chapter 5 of the General Provisions of the Income Tax Act of the Kingdom of
Bhutan, 2001.

2 Rule No. 2 Transfer and Closure of Business (Section 6)
2.1 Winding up of company
A company being wound up or liquidated shall be liable to tax in accordance with the provisions
under the Companies Act of the Kingdom of Bhutan, 2000.

2.2 Transfer and Closure of Business
Liability to tax as a result of transfer or closure of a business shall be as follows:

2.1.1 Change of Business Ownership
Both the previous owner and the new owner shall report change of ownership of a business in
writing to the concerned RRCO. Trade/Industrial License shall also be transferred through the
Ministry of Trade and Industry (MTI) on submission of Tax Clearance Certificate for companies,
and for businesses issued by the RRCO.
Where the change of ownership has not been reported, the new owner shall be responsible for
settlement of all outstanding tax liabilities.

2.1.2 Business Closure
When closing a business unit, the following procedures must be adhered to:
ƒ The taxpayer must notify the RRCO at least 2 months before the date of closure.
ƒ The taxpayer shall submit the final accounts till date and make provisions for the remaining 2
months.
ƒ The taxpayer (companies and businesses) shall obtain a Tax Clearance Certificate from the
concerned RRCO.
Where the change of ownership has not been reported, the new owner shall be responsible for
settlement of all outstanding tax liabilities.

3 Rule No. 3 Collection (Chapter 3)
3.1 Collection Authority
The Department of Revenue and Customs through its Regional Revenue & Customs Office and
withholding agencies shall be responsible for the collection of taxes as per the provisions given
under this Rule.

3.2 Payment of Tax
Taxpayers shall pay taxes to the RRCO in one or more of the following ways as mentioned below:

Page 32 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
3.2.1 Taxes paid during the income year
a) Advance Taxes
All companies and large and medium businesses shall pay advance tax as follows:
Due date Advance Tax amount

31 st August
30% BIT/CIT based on half yearly Profit and Loss account, or
where half yearly accounts cannot be submitted on reasonable
grounds, 50% of the BIT/CIT paid in the previous year

b) Tax Paid on Quarterly basis
Individuals employed by an employer not liable to deduct tax at source shall pay tax in 4
equal instalments during the income year by computing their annual tax liability and dividing
it into 4 instalments. The tax must be deposited with the RRCO where the individual is
registered as a taxpayer on 31
st March, 30 th June, 30 th September and 31 st December of the
income year.

3.2.2 Tax Deducted at Source (TDS)
TDS is a preliminary estimate of a person’s annual tax liability and shall be adjusted against the
final tax at the time of filing the annual tax return unless otherwise specified. The withholding
agencies are responsible for deducting and depositing TDS as below:

Sl.No. Withholding Agency Sources
1 Employer Salary (refer 3.2.2(a))
2 Government, Semi government & Non-government
organisations, Companies and Businesses, Rental Income (3.2.2(b))
3 Companies Dividend (refer 3.2.2(c)
4 Financial Institutions Interest (refer 3.2.2(d))
5 Department of Tourism Tour Income (refer 3.2.2(f))
6 Contract Awarder Contract income (refer 3.2.2(g)
7 Government, Semi government & Non-government
organisations, Companies, and Businesses, Other Income (refer 3.2.2(e))

3.2.2(a) Salary Income (Section 12)
Salary income includes fees paid to non-licensed freelance consultants. The employer shall deduct
tax at source (TDS) on salary income at the time of disbursement as per schedule prescribed in
Annexure III. The amount so deducted shall be deposited with the nearest RRCO or to a RGR
account on or before the 10
th of the month following the date of deduction as per FORM IT-1.
The tax deducted at source shall be adjusted against the person’s tax liability, therefore, the
employer must:
ƒ Maintain proper accounting records.
ƒ Submit monthly and yearly information to the RRCO where the employer is registered as a
taxpayer as per FORM IT-1.
ƒ Ensure that the retirement benefits are paid only on production of Tax Clearance Certificates
issued by a RRCO.
For persons other than a citizen or a resident, the TDS is final and tax returns need not be filed.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 33
Failure to comply with the above Rules shall result in fines and penalties as mentioned in Chapter
5 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

3.2.2(b) Rental Income
A corporate or business entity or a government, semi-government, non-government organisation
hiring real property as defined under Rule No. 2.2 of Part III, of these Rules shall at the time of
payment deduct tax at source (TDS) at the rate of 5% of the gross rental payment. The amount
so deducted shall be deposited to the concerned RRCO on or before the 10
th of the month
following the date of deduction as per FORM IT-2.
The tax deducted at source shall be adjusted against the person’s final tax liability, therefore, all
withholding agencies must maintain proper accounting records.
Failure to comply with the above Rules will result in fines and penalties as per Chapter 5 of
General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

3.2.2(c) Dividend Income (Section 13)
A company paying dividend to its shareholders shall at the time of payment deduct tax on
dividend income at source as per rates prescribed below and deposit it to the concerned RRCO on
or before the 10
th of the month following the date of deduction as per FORM IT-3.

Citizens and residents Dividend Nu. 10,000 or below No Deductions
Dividend Nu. 10,001 & above 10% of the Total Dividend Income
Persons other than
citizens and residents 10% on the Total Dividend Income as final tax, and return need not be
filed.
CIT & BIT units 10% on the Total Dividend Income

The tax deducted at source shall be adjusted against the persons final tax liability, therefore, the
company must:
ƒ Maintain proper accounting records.
ƒ Submit yearly accounts before December 31
st to the RRCO as per FORM IT-3.
Failure to comply with the above Rules will result in fines and penalties as per the provisions
under Chapter 5 of the Income Tax Act of the Kingdom of Bhutan, 2001.

3.2.2(d) Interest Income (Section 14)
A financial institution paying interest to its clients shall deduct tax on interest income at source
at the time the interest is paid or credited to the client’s account as per rates prescribed below.
TDS must be deposited to the concerned RRCO on or before the 10
th of the month following the
date of deduction as per FORM IT-4.
Citizens and residents Interest Nu. 10,000 or below No Deductions
Interest Nu. 10,001 & above 5% of the Total Interest Income
Persons other than
citizens and residents 5% on the Total Interest Income as final tax and returns need not be
filed.
CIT & BIT units 5% on the Total Interest Income
The tax deducted at source shall be adjusted against the persons final tax liability, therefore, the
financial institutions must:
ƒ Maintain proper accounting records.

Page 34 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
ƒ Submit yearly accounts before December 31 st to the RRCO as per FORM IT-4.
Failure to comply with the above Rules will result in fines and penalties as per Chapter 5 of
General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

3.2.2(e) Other Income (Section 16)
A corporate or business entity or a government, semi-government, non-government organisation
hiring vehicles, plant, machinery or paying for the use of intellectual property from an individual or
another tax entity shall at the time of payment deduct tax at source at the rate of 5% of the
gross payment, and shall deposit the tax to the concerned RRCO on or before the 10
th of the
month following the date of deduction as per FORM IT-5.
The tax deducted at source shall be adjusted against the person’s final tax liability, therefore, all
withholding agencies must maintain proper accounting records.
Failure to comply with the above Rules will result in fines and penalties as per Chapter 5 of
General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

3.2.2(f) TDS from National Tour Operators (Section 17)
The Department of Tourism (DOT) shall deduct tax at source at the rate of 2% of the Tour
Income, and shall deposit the tax in a RGR account on or before 10
th of the month following the
date of deduction as per FORM IT-6 with a copy to the tour operator.
The tax deducted at source will be adjusted against the tour operator’s final tax liability, therefore,
the tour operators must maintain proper accounting records.
Failure to comply with the above Rules will result in fines and penalties as per Chapter 5 of
General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

3.2.2(g) Contractors (Section 18)
Tax shall be deducted at source for construction, logging work, management contracts, supplies,
transportation, consultancy and other professional services by a contract awarder in the manner
prescribed below:
a) Contractors under Full Tax Liability
The contract awarder shall:
ƒ Deduct contractor’s tax at source at the rate of 2% of the gross amount on the day of
payment. The amount so deducted shall be adjusted against the contractor’s final tax
liability.
ƒ TDS must be deposited into a RGR account or to the concerned RRCO on or before 10
th
of the month following the date of deduction as per FORM IT-7 with a copy to the
contractor.
b) Contractors under Limited Tax Liability
The contract awarder shall:
ƒ Deduct contractor’s tax at source at the rate of 3% of the gross amount on the day of
payment as final tax of the contractor.
ƒ TDS must be deposited into a RGR account or to the concerned RRCO on or before 10
th
of the month following the date of deduction as per FORM IT-7 with a copy to the
contractor.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 35
3.2.3 Tax Paid when Filing Annual Tax Return
Companies and businesses shall file their annual tax returns at the latest by March 31 st and
individuals at the latest by March 1 st in the year following the income year. Advance tax, tax paid
on a quarterly basis and TDS shall be adjusted provided accounts have been submitted (CIT/BIT
taxpayers) and TDS deduction certificates produced (CIT/BIT/PIT taxpayers) in the following
manner:
a) Advance Tax shall be adjusted at the time of filing of tax return against provisional tax
payable provided accounts are submitted.
b) Taxes paid on a quarterly basis shall be adjusted at the time of filing of tax return
provided revenue receipts are produced.
c) TDS shall be adjusted
ƒ At the time of advance tax payment;
ƒ At the time of provisional tax payment;
ƒ At the time of final tax payment.
4 Rule No. 4 Information, Control and Documentation (Chapter 4)
All registered companies and business units shall maintain proper accounting records. The
following sections are intended to provide a guideline as to what constitutes ‘proper accounting
records’ for different categories of CIT/BIT taxpayers.
The specific book of accounts to be maintained by a taxpayer depends on the category of unit to
which the taxpayer belongs. The categorisation of companies and business shall be in accordance
with the categorization given in Annexure I.

4.1 Companies, Large and Medium Business units
All companies, large and medium business units regardless of their size must maintain the
following books of account and associated records:
ƒ Trial Balance;
ƒ Manufacturing & Trading Accounts;
ƒ Profit & Loss Accounts;
ƒ Balance Sheet;
ƒ General/Nominal Ledger;
ƒ Cash Book, Bank Statements, and Bank Reconciliation Statements;
ƒ Sales Ledger, Registers and Supporting bills, Cash Memos and Receipts;
ƒ Purchase Ledger, Registers and Supporting Bills, Receipts and Vouchers;
ƒ Journal Book;
ƒ Fixed Asset Register;
ƒ Stock Register.

4.2 Small, Cottage/Micro Business Units
Small businesses must maintain basic accounting records to ensure that all transactions are
recorded. Therefore, for such businesses records such as cashbook, a daily list of sales
summarised monthly & annually, cash memos, and purchase invoice may be maintained.
However, where these records are not available, annual tax assessment shall be done on an
estimated basis as per Rule No. 1.5 of the General Provisions.

Page 36 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
4.3 Information from Third Parties
All public and private entities and individuals, on written request by a Regional Director or the
Head of the Department, shall furnish any relevant information on a taxpayer. The request for
information shall be made when a RRCO requires the information to determine tax liability of a
taxpayer.

5 Rule No. 5 Recovery Measures (Chapter 6)
5.1 General
The following recovery measures shall be used when a company, business or person:
ƒ Has not paid tax within the due date; or
ƒ Has not deducted tax at source within due date; or
ƒ Has not paid fines and penalties.

5.1.1 Agreement
The RRCO shall enter into an agreement with a taxpayer for recovery of tax dues and claims. The
agreement shall specify dues, terms of payments, mode of payment etc. Prior approval of the
DRCHQ is required if the payback period is longer than 12 months.

5.1.2 Restraint on Asset
Where a taxpayer defaults the payment of tax dues as per the agreement under Rule No. 5.1.1
above, the RRCO shall put a restraint on the taxpayer’s property, or income from the taxpayer’s
property covering sufficiently the amount of outstanding tax/claims as mentioned below:
a) Issue a restraint order as per FORM IT-8 to the taxpayer stating clearly the grounds for
restraint.
b) Notify the general public and the concerned authorities of the property being restrained and
the right to subsequent claims where third parties have prior claims to the property/income.
c) Register details of the property/assets/income restrained in the Restraint Book.
d) Enter into further agreement stipulating faster recovery of dues.
If a taxpayer settles tax dues, the RRCO shall inform the taxpayer stating clearly that his/her dues
have been cleared and the restraint order shall be annulled thereafter.

5.1.3 Executing Bond
Notwithstanding Rule No. 5.1.2 above, the RRCO may execute a bond or security issued by
another person or entity in cases where:
ƒ The taxpayer’s liquidity is poor; or
ƒ The taxpayer does not own sufficient assets or other security to cover the tax dues; or
ƒ The tax due is high compared to income from his business; or
ƒ The tax authority has reason to believe that the taxpayer may leave the country.

If the bond or security is redeemed, the RRCO shall adjust the tax dues/outstanding and refund the
excess amount, if any.

5.1.4 Detention of Assets
Assets restrained under Rule No. 5.1.2 above may be detained if a taxpayer fails or has failed to
settle his/her tax dues as per conditions set out thereto. Once detained, the assets may be
auctioned and disposed off by the RRCO:
a) After obtaining prior approval from head of the Department;
b) After fixing the reserved value of asset to be disposed of;

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 37
c) By an Auction Committee comprising at least two officers from the RRCO, and two
representatives from the concerned Dzongkhag;
d) Under the chairmanship of the Regional Director and
e) By notifying at least two weeks before the date of auction by the RRCO.

5.1.5 Adjustment of Auction Proceeds against Tax Dues
The proceeds from the auction shall be adjusted against the duties and taxes due, interest and
fines as well as costs of detaining the assets and the auction thereof. The RRCO shall inform the
taxpayer of the adjustment in writing and refund the excess amount, if any, to the taxpayer.

5.1.6 Suspension and Cancellation of Business License
Notwithstanding Rules No. 5.1.1, 5.1.2, 5.1.3, 5.1.4, 5.1.5; the Department through the Ministry
of Finance shall recommend to the concerned authority for cancellation of a taxpayer’s licence.

6 Rule No 6 Tax Clearance Certificate
A Tax Clearance Certificate for companies, for business units and for individuals must be obtained
from a RRCO where they are registered as a taxpayer in the following cases:
a) Before leaving the country for 6 months or more;
b) At the time of obtaining and renewal of licence or bidding for any works and service
contracts;
c) At the time of transfer of ownership or location of business; or
d) At the time of closing of a business.

6.1 Issue of Tax Clearance Certificate
A Tax Clearance Certificate shall be issued provided:
ƒ There are no outstanding taxes due to the government; or
ƒ A person/entity does not have taxable income.

Page 38 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT-1 CIT REGISTRATION

ROYAL GOVERNMENT OF BHUTAN
REGIONAL REVENUE & CUSTOMS OFFICE

_____________________________________

1. DETAILS OF COMPANY

a) Name of Company
________________________________________________

b) Registered Address of Company_________________________________________________

Dzongkhag______________Town/City______________Street Name ___________________

Post Box No _____________ Phone No.___________ Fax No. ______________________

Email address _____________________________

2. TYPE OF OWNERSHIP (please tick)

a) Private Company
b) Government Company
c) Joint Venture Company
d) Foreign Company

3. LICENSE DETAILS AND ACTIVITIES

License No. Date of Issue Nature of Activity

If required, please use additional sheet.

4. COMPANY REGISTRATION DETAILS

a) Registration No: _______________________________________________________
b) Date of Registration: ___________________________________________________

5. NO. OF REGULAR EMPLOYEES (including those at branch units)

Number: ____________________________________

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 39
6. ADDRESS OF BRANCH /SUBSIDIARY UNITS

TPN Name of the unit Town/City Post Box No Phone No Fax No.

If required, please use additional sheet.

Note: Any change in the above information must be informed to the RRCO of registration within one month of the change.

I hereby declare that the above information is true and correct to the best of my knowledge.

Signature of the Chairperson:
_______________________________

Name of the Chairperson:
_______________________________

FOR OFFICIAL USE ONLY

You are hereby allocated a Tax Payer Number (TPN) __________________ by the Regional Revenue
Customs Office__________________ on _________day _________ month __________ year.

You are requested to use your TPN in all your correspondences with us.

Yours faithfully,

Name & Signature of the Issuing Authority

Page 40 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT-2 ANNUAL CORPORATE INCOME TAX RETURN

ANNUAL CORPORATE INCOME TAX RETURN FOR THE YEAR _______________________

From: Name of MD _________________________________________________
Name of Company _________________________________________________
_________________________________________________
_________________________________________________
License Nos. _________________________________________________
TPN _________________________________________________
Date _________________________________________________

To: The Regional Director
Regional Revenue & Customs Office
_________________________

Please find attached the following documents relating to Corporate Income Tax for the Income Year _________.

ƒ Annual Accounts in Standard Format.

ƒ Money Receipts for Advance Taxes already paid or CIT withheld at source.

ƒ Cash/Cheque No.
_____dated for
Nu.(figures)___________________________________________________________________
______________________(words) only in payment of Self-Declared Corporate Income Tax .

I/We declare that the records submitted herewith are true and correct in every respect, to the best of my/our
knowledge and belief.

Authorized Signatory: ___________________________________
Name & Designation: ___________________________________
Date: ______________________________________

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 41
FORM CIT 2 CIT Standard Accounts Format

In the format shown below, dd/mm/20vv represents the day/month/year of the end of the current accounting period; 19vu
represents the end of the previous accounting period (of the same duration); XXXX are current year values; YYYY are prior year
values.

Profit & Loss Account for the year ended dd/mm/20vv

Schedule 20vv 20vu
Nu’000 Nu’000

Total Sales 1 XXXX YYYY
——— ——–
TOTAL INCOME XXXX YYYY
Less: Direct Expenses 3 XXXX YYYY
——— ——–
GROSS PROFIT XXXX YYYY

Other Income 2 XXXX YYYY

Less: Selling Expenses 4 XXXX YYYY
Less: Administration Expenses 5 XXXX YYYY
Less: Depreciation for year 14 XXXX YYYY
Less: Other Financial Expenses 6 XXXX YYYY
Less: Interest Paid XXXX YYYY
——— ——–
NET PROFIT FOR THE YEAR (#) XXXX YYYY
Add: Inadmissible expenses for tax purposes
Direct 7 XXXX YYYY
Selling 8 XXXX YYYY
Administration 9 XXXX YYYY
Financial Expenses 10 XXXX YYYY
Appropriations 11 XXXX YYYY

INITIAL SELF ASSESSED PROFIT FOR YEAR (A) XXXX YYYY
Add

Bonus Limit @ 10% = Amount Disallowed 12 XXXX YYYY
Ent/Staff Welfare Limit @ 2% =Amount Disallowed 13 XXXX YYYY

SELF ASSESSED TAXABLE PROFIT XXXX YYYY
Less tax allowed losses carried forward (XXXX) (YYYY)

FINAL SELF ASSESSED TAXABLE PROFIT (B) XXXX YYYY

SELF-DECLARED CIT @ 30% of B (*) XXXX YYYY

Less Amounts Already Paid:
Advance Taxes (XXXX) (YYYY)
CIT Withheld at Source (XXXX) (YYYY)
——— ———
BALANCE CIT PAYABLE XXXX YYYY
==== ====

Please note that a tax allowed loss could only be carried over for a maximum of three years and then it becomes invalid. An
account showing how much loss and to which year the loss relates to needs to be kept.

Page 42 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT-2 CIT Standard Accounts Format

I/We declare that the information in this document and any attachments is true and correct to the best of my (our) knowledge
and belief. Late submission, misleading or false information shall result in fines and penalties as per the Income Tax Act of the
Kingdom of Bhutan, 2001 and rules thereto.

Name and Signature of owner or authorized signatory and Date

Balance Sheet as at dd/mm/20vv

Schedule 20vv 20vu
Nu’000 Nu’000

Fixed Assets 14 XXXX YYYY
Current Assets 15 XXXX YYYY
——— ——–
TOTAL ASSETS XXXX YYYY
Less: Current Liabilities 16 XXXX YYYY
——— ——–
TOTAL ASSETS LESS CURRENT LIABILITIES XXXX YYYY
=== ===
Financed By:
Long Term Capital 17 XXXX YYYY
Retained Profit brought forward XXXX YYYY
Net Profit for year (#) XXXX YYYY
Less/CIT (*) (XXXX) (YYYY)
Plus (minus) any transfers in or (out) XXXX YYYY
Retained Profit carried forward XXXX YYYY
Long Term Liability 18 XXXX YYYY
———- ———-
TOTAL CAPITAL XXXX YYYY
==== ====

I/We declare that the information in this document and any attachments is true and correct to the best of my (our)
knowledge and belief. Late submission, misleading or false information shall result in fines and penalties as per the
Income Tax Act of the Kingdom of Bhutan, 2001 and rules thereto.

Name and Signature of owner or authorized signatory and Date

Schedule 1: Total Sales
20vv 20vu
Nu’000 Nu’000

Sales Cash XXXX YYYY
Sales Credit XXXX YYYY
…………………………. XXXX YYYY
———- ———-
TOTAL SALES XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 43
FORM CIT 2 CIT Standard Accounts Format

Schedule 2: Other Income 20vv 20vu
Nu’000 Nu’000
Interest Income:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Interest XXXX YYYY

Rent Income:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Rent XXXX YYYY

Other Income:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Other XXXX YYYY
———- ———
TOTAL OTHER INCOME XXXX YYYY
==== ===
Schedule 3: Direct Expenses
Direct expenses are those expenses, which can be directly related to the production and or purchase of goods for the main line
of business of an organization). Listed below are the some common expenses, which fall under this head. Please remember
that this is not an exhaustive list.
20vv 20vu
Nu’000 Nu’000

Opening Stock XXXX YYYY
Less: Closing Stock (XXXX) (YYYY)
Stock Movement XXXX YYYY
Opening Work in Progress XXXX YYYY
Less: Closing Work in progress (XXXX) (YYYY)
Work in Progress Movement XXXX YYYY

Direct Purchases:
Raw Materials XXXX YYYY
Components XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Purchases XXXX YYYY

Page 44 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT 2 CIT Standard Accounts Format
Direct Staff Costs:
Permanent Salary Costs XXXX YYYY
Wages XXXX YYYY
Labor Charges XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Staff Costs XXXX YYYY

Other Direct Expenses:
Loading & Unloading XXXX YYYY
Carriage Inward XXXX YYYY
Bhutan Sales Tax XXXX YYYY
Customs Duties XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Other XXXX YYYY
——– ———
TOTAL DIRECT EXPENSES XXXX YYYY
=== ===

Schedule 4: Selling Expenses
(Selling expenses are those expenses incurred while trying to sell or promote a product). Listed below are the some common
expenses, which fall under this head. Please remember that this is not an exhaustive list.

20vv 20vu
Nu’000 Nu’000
Selling Staff Costs:
Permanent Salary Costs XXXX YYYY
Wages XXXX YYYY
Labor Charges XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY

Total Staff Costs XXXX YYYY

Other Selling Expenses:
Travel expenses for selling the product XXXX YYYY
Entertaining XXXX YYYY
Distribution costs (Transport & Freight) XXXX YYYY
Publicity XXXX YYYY
Commissions XXXX YYYY
……………… XXXX YYYY
…………….. XXXX YYYY
………………. XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 45
FORM CIT 2 CIT Standard Accounts Format
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY

Total Other XXXX YYYY
——— ———
TOTAL SELLING EXPENSES XXXX YYYY
==== ====

Schedule 5: Administration Expenses

(Administration expenses are those expenses incurred while trying to run or administer a business). Listed below are the some
common expenses, which fall under this head. Please remember that this is not an exhaustive list.

20vv 20vu
Nu’000 Nu’000
Administration Staff Costs:
Permanent Salary Costs XXXX YYYY
Wages XXXX YYYY
Labor Charges XXXX YYYY
Staff Welfare XXXX YYYY
Provident/Gratuity Fund XXXX YYYY
Bonus XXXX YYYY
……………………… XXXX YYYY
……………………. XXXX YYYY
Total Staff Costs XXXX YYYY

Other Administration Expenses:
Donations XXXX YYYY
Rent XXXX YYYY
Electricity XXXX YYYY
Postage XXXX YYYY
Telephone XXXX YYYY
Water Charges XXXX YYYY
Municipal Charges XXXX YYYY
Stocks write off XXXX YYYY
Loss on disposal of fixed assets XXXX YYYY
Staff Training XXXX YYYY
Audit Fees XXXX YYYY
Consultancy Fees XXXX YYYY
Other taxes Paid (excluding CIT) XXXX YYYY
Other Professional Fees XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Other XXXX YYYY
——— ———
TOTAL ADMINISTRATION EXPENSES XXXX YYYY
===== ====

Page 46 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT 2 CIT Standard Accounts Format

Schedule 6: Financial Expenses
(Financial expenses are those expenses incurred due to the usage of financial (monetary) transactions in the business). Listed
below are the some common expenses, which fall under this head. Please remember that this is not an exhaustive list.
20vv 20vu
Nu’000 Nu’000
Bad Debts XXXX YYYY
Bank Charges & other exp. XXXX YYYY
Foreign Exchange hedging losses XXXX YYYY
Prov. for Bad & Doubtful Debts XXXX YYYY
Provision for any Doubtful Advances XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL Financial Expenses XXXX YYYY
==== ====
Schedule 7: Inadmissible Direct Expenses
20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL XXXX YYYY
==== ====

Schedule 8: Inadmissible Selling Expenses 20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL XXXX YYYY
==== ====

Schedule 9: Inadmissible Administration Expenses
20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——– ———-
TOTAL XXXX YYYY
===== =====

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 47
FORM CIT 2 CIT Standard Accounts Format
Schedule 10: Inadmissible Financial Expenses
20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——— ———-
TOTAL XXXX YYYY
===== =====
Schedule 11: Appropriations
20vv 20vu
Nu’000 Nu’000
Salary Claimed XXXX YYYY
Salary Allowable XXXX
YYYY
Excess Salary XXXX YYYY
Dividends inadmissible as expenses XXXX YYYY
Other Appropriations:
Donations Claimed XXXX YYYY
Donations Allowable XXXX
YYYY
Donations Inadmissible XXXX YYYY
Interest Allowable XXXX
YYYY
Interest Inadmissible XXXX YYYY
Income appropriations XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL XXXX YYYY
===== =====

Schedule 12: Bonuses disallowed
20vv 20vu
Nu’000 Nu’000
Bonus Claimed XXXX YYYY
Initial Assessed Net profit (A) XXXX
YYYY
NP from which 10% value is calculated XXXX YYYY
Bonus Allowable as per 10% rule XXXX
YYYY
Bonus Claimed: XXXX YYYY
Bonus Disallowed due to regulation or inadequate supporting (
XXXX) (YYYY)
Bonus Allowable as per bookings XXXX
YYYY

Only if the bonus allowable as per bookings is greater then the bonus allowable as per the 10% rule then there should
be more disallowances to the value of the difference between the bonus allowable as per the bookings and the bonus allowable
as per the 10% rule and this should be added to the other bonus disallowance as mentioned below to come to the total bonus
disallowed figure

Total bonuses to be disallowed

Bonus Disallowed due to regulation or inadequate supporting XXXX YYYY
Bonus Disallowed due to the difference as mentioned above XXXX
YYYY
Total Bonus disallowed XXXX YYYY

=== ===

Page 48 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT 2 CIT Standard Accounts Format

Schedule 13: Entertainment and Staff Welfare disallowed

20vv 20vu
Nu’000 Nu’000
Ent/Staff Welfare Claimed (club all these exps) XXXX YYYY
Initial Assessed Net profit (A) XXXX
YYYY
NP from which 2% value is calculated XXXX YYYY
Ent/Staff Welfare Allowable as per 2% rule XXXX
YYYY
Ent/Staff Welfare Claimed (club all these exps) XXXX YYYY
Ent/Staff Welfare Disallowed due to inadequate supporting (XXXX
) (YYYY)
Ent/Staff Welfare Allowable as per bookings XXXX
YYYY

Only if the Ent/Staff Welfare allowable as per bookings is greater then the Ent/Staff Welfare allowable as per the
2% rule then there should be more disallowances to the value of the difference between the Ent/Staff Welfare allowable as per
the bookings and the Ent/Staff Welfare allowable as per the 10% rule and this should be added to the other Ent/Staff Welfare
disallowance as mentioned below to come to the total Ent/Staff Welfare disallowed figure

Total Ent/Staff Welfare to be disallowed

Ent/Staff Welfare Disallowed due to inadequate supporting XXXX YYYY
Ent/Staff Welfare Disallowed due to the difference as mentioned above XXXX
YYYY
Total Ent/Staff Welfare disallowed XXXX YYYY

Schedule 14 : Fixed Assets
20vv 20vu
Nu’000 Nu’000
Additions in the year: Date Rate
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
Less:
Disposals in the year Date Rate
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
Cost brought forward from previous year XXXX YYYY
———- —-.——
Cost carried forward to next year XXXX YYYY
===== ====

Depreciation for year:

Asset: Cost Rate
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 49
FORM CIT 2 CIT Standard Accounts Format
——— ———
TOTAL DEPRECIATION FOR YEAR XXXX YYYY
Less: Depreciation on Disposals
Disposals: Date Rate
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)

Depreciation brought forward from last year XXXX YYYY
———- ———-
Depreciation carried forward to next year XXXX YYYY
==== ====

Net Book Value brought forward from last year XXXX YYYY
===== =====
NET BOOK VALUE CARRIED FORWARD TO NEXT YEAR XXXX YYYY
===== =====

Schedule 15: Current Assets
20vv 20vu
Nu’000 Nu’000
Cash XXXX YYYY
Bank XXXX YYYY

Sundry Debtors:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Less: Provisions XXXX) (YYYY)
Total Sundry Debtors XXXX YYYY

Closing Stock:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Closing Stock XXXX YYYY

Prepayments:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Prepayments XXXX YYYY

Other Current Assets:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY

Page 50 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM CIT 2 CIT Standard Accounts Format

Total Other XXXX YYYY
——— ———
TOTAL CURRENT ASSETS XXXX YYYY
===== =====

Schedule 16 : Current Liabilities
20vv 20vu
Nu’000 Nu’000
Bank Overdraft XXXX YYYY
Unpaid Wages XXXX YYYY
Unpaid Taxes XXXX YYYY
Trade Creditors:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Trade Creditors XXXX YYYY

Sundry Creditors:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Sundry Creditors XXXX YYYY

Other Current Liabilities:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Other XXXX YYYY
——— ———
TOTAL CURRENT LIABILITIES XXXX YYYY

==== ====

Schedule 17: Long Term Capital
20vv 20vu
Nu’000 Nu’000
Proprietor’s Capital:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Proprietor’s Capital (A) XXXX YYYY
Shareholders Funds:
Ordinary Shares XXXX YYYY
Preference Shares XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 51
FORM CIT 2 CIT Standard Accounts Format

…………………………. XXXX YYYY
Total Shareholders Funds (B) XXXX YYYY

Donor or other Financing: (Capital Grants)
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
………………………… XXXX YYYY
…………………………. XXXX YYYY
Total Donor or other Financing (Capital Grants) (C) XXXX YYYY
——— ———
TOTAL LONG TERM CAPITAL (A+B+C) XXXX YYYY
===== ====

Schedule 18: Long Term Loans

Long Term Loans:
Bank of Bhutan XXXX YYYY
Royal Monetary Authority XXXX YYYY
Royal Insurance Corporation of Bhutan XXXX YYYY
Bhutan Development Finance Corporation XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Long Term Loans (A) XXXX YYY
Donor Financing (Liability):
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
………………………… XXXX YYYY
…………………………. XXXX YYYY

Total Donor Financing (liability) (B) XXXX YYYY

Other Financing (Liability):
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Other (C) XXXX YYYY
——— ———
TOTAL LONG TERM LOAN (A+B+C) XXXX YYYY

Page 52 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT-1 BIT REGISTRATION

ROYAL GOVERNMENT OF BHUTAN
REGIONAL REVENUE & CUSTOMS OFFICE
____________________________________

Date:

1. DETAILS OF BUSINESS

a) Name of the Business _____________________________________________________

b) Type of Business Trading Service Manufacturing

c) Investment Range
Nu. 100 million and above

Nu. 10 million to Nu. 100 million

Nu. 5 million to Nu. 10 million

Nu. 3 million to Nu. 5 million

Nu. 1 million to Nu. 3 million

Less than Nu. 1 million

d) Registered Address of the Business ________________________________________________
Street Name ______________ Post Box No._____________ Dzongkhag __________________
Gwog_____________________Village__________________PhoneNo._________________
Fax No._________________________ Email address ________________________________

2. TYPE OF OWNERSHIP (please tick)

Sole Proprietorship
Partnership

3. OWNERSHIP DETAILS
Name____________________________Sex__________ Date of Birth/Year _____________________
Citizen ID Card No/Resident Permit No.________________________Nationality ______________________
Street Name______________________ Post Box No.___________ Fax No._______________________
Village_______________________Gewog___________________ Dzongkhag ____________________

If a business has more than one owner, same details should be filled in a separate sheet.

4. DATE OF BUSINESS ESTABLISHMENT
Date_____________________Month______________________ Year__________________________

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 53
5. LICENSE DETAILS AND ACTIVITIES
License No. Date of Issue Nature of Activity

If required, please use additional sheet.

6. OTHER BUSINESSESS OWNED BY THE OWNER

TPN/ Entity
Code Name of the Unit Address Post Box No. Phone No. Fax No.

If required, please use additional sheet.

Note: Any change in the above information must be informed to the RRCO of registration within one month of the change.

I hereby declare that the above information is true and correct to the best of my knowledge.

Signature of the Owner: _______________________________

Name of the Owner: _______________________________

FOR OFFICIAL USE ONLY

You are hereby allocated a Tax Payer Number (TPN) ______________________ by the Regional Revenue Customs
Office__________________ on _________day _________ month __________ year.

You are requested to use your TPN in all your correspondences with us.

Yours faithfully,

Name & Signature of the Issuing Authority

Page 54 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT-2 ANNUAL BUSINESS INCOME TAX RETURN

ANNUAL BUSINESS INCOME TAX RETURN FOR THE YEAR ________________________

From: Name of Proprietor ________________________________________________
Name of Business ________________________________________________
________________________________________________
________________________________________________
License Nos. ________________________________________________
TPN/Entity Code No. ________________________________________________
Date ________________________________________________

To: The Regional Director
Regional Revenue & Customs Office
________________________

Please find attached the following documents relating to Business Income Tax for the Tax Year_____________:

ƒ Annual Accounts in Standard Format.
ƒ Money Receipts for Advance Taxes already paid or BIT withheld at source.
ƒ Cash/Cheque No.
dated for Nu.(figures) (words)
________________________________________________only in payment of Self-Declared
Business Income Tax.

I/We declare that the records submitted herewith are true and correct in every respect, to the best of my/our
knowledge and belief.

Authorized Signatory ____________________________________
Name & Designation: ____________________________________
Date: ____________________________________

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 55
FORM BIT 2 BIT Standard Accounts Format

Profit & Loss Account for the year ended dd/mm/20vv

Schedule 20vv 20vu
Nu’000 Nu’000

Total Sales 1 XXXX YYYY
——— ——–
TOTAL INCOME XXXX YYYY
Less: Direct Expenses 3 XXXX YYYY
——— ——–
GROSS PROFIT XXXX YYYY

Other Income 2 XXXX YYYY

INITIAL SELF ASSESSED PROFIT FOR YEAR (A) XXXX YYYY
Add

Bonus Limit @ 10% = Amount Disallowed 12 XXXX YYYY
Ent/Staff Welfare Limit @ 2% =Amount Disallowed 13 XXXX YYYY

SELF ASSESSED TAXABLE PROFIT XXXX YYYY
Less tax allowed losses carried forward (XXXX) (YYYY)

FINAL SELF ASSESSED TAXABLE PROFIT (B) XXXX YYYY

SELF-DECLARED BIT/
BIT @ 30% of B (*) XXXX YYYY

Less Amounts Already Paid:
Advance Taxes (XXXX) (YYYY)

BIT Withheld at Source (XXXX) (YYYY)
——— ———
BALANCE
BIT PAYABLE XXXX YYYY
===== ====

Please note that a tax allowed loss could only be carried over for a maximum of three years and then it becomes
invalid. An account showing how much loss and to which year the loss relates to needs to be kept.

Page 56 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT 2 BIT Standard Accounts Format

Name and Signature of owner or authorized signatory and Date

Name and Signature of Accountant who prepared the accounts and Date.

Balance Sheet as at dd/mm/20vv

Schedule 20vv 20vu
Nu’000 Nu’000

Fixed Assets 14 XXXX YYYY
Current Assets 15 XXXX YYYY
——— ——–
TOTAL ASSETS XXXX YYYY
Less: Current Liabilities 16 XXXX YYYY
——— ——–
TOTAL ASSETS LESS CURRENT LIABILITIES XXXX YYYY
=== ===
Financed By:
Long Term Capital 17 XXXX YYYY
Retained Profit brought forward XXXX YYYY
Net Profit for year (#) XXXX YYYY
Less/BIT (*) (XXXX) (YYYY)
Plus (minus) any transfers in or (out) XXXX YYYY
Retained Profit carried forward XXXX YYYY
Long Term Liability 18 XXXX YYYY
———- ———-
TOTAL CAPITAL XXXX YYYY
==== ====

Name and Signature of owner or authorized signatory and Date

Name and Signature of Accountant who prepared the accounts and Date.

Schedule 1: Total Sales
20vv 20vu
Nu’000 Nu’000
Sales Cash XXXX YYYY
Sales Credit XXXX YYYY
…………………………. XXXX YYYY
TOTAL SALES ———- ———-
XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 57
FORM BIT 2 BIT Standard Accounts Format

Schedule 3: Direct Expenses

Direct expenses are those expenses, which can be directly related to the production and or purchase of goods for the main line
of business of an organization). Listed below are the some common expenses, which fall under this head. Please remember
that this is not an exhaustive list.
20vv 20vu
Nu’000 Nu’000

Opening Stock XXXX YYYY
Less: Closing Stock (XXXX) (YYYY)
Stock Movement XXXX YYYY
Opening Work in Progress XXXX YYYY
Less: Closing Work in progress (XXXX) (YYYY)
Work in Progress Movement XXXX YYYY

Page 58 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT 2 BIT Standard Accounts Format
Direct Staff Costs:
Permanent Salary Costs XXXX YYYY
Wages XXXX YYYY
Labor Charges XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Staff Costs XXXX YYYY

Total Staff Costs XXXX YYYY

Other Selling Expenses:
Travel expenses for selling the product XXXX YYYY
Entertaining XXXX YYYY
Distribution costs (Transport & Freight) XXXX YYYY
Publicity
XXXX YYYY
Commissions XXXX YYYY
……………… XXXX YYYY
…………….. XXXX YYYY
………………. XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 59
BIT FORM 2 BIT Standard Accounts Format
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY

Total Other XXXX YYYY
——— ———
TOTAL SELLING EXPENSES XXXX YYYY
==== ====

Schedule 5: Administration Expenses
(Administration expenses are those expenses incurred while trying to run or administer a business). Listed below are the some
common expenses, which fall under this head. Please remember that this is not an exhaustive list.

Other Administration Expenses:
Donations XXXX YYYY
Rent XXXX YYYY
Electricity XXXX YYYY
Postage XXXX YYYY
Telephone XXXX YYYY
Water Charges XXXX YYYY
Municipal Charges XXXX YYYY
Stocks write off XXXX YYYY
Loss on disposal of fixed assets XXXX YYYY
Staff Training XXXX YYYY
Audit Fees XXXX YYYY
Consultancy Fees XXXX YYYY
Other taxes Paid (excluding BIT) XXXX YYYY
Other Professional Fees XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Other XXXX YYYY
——— ———
TOTAL ADMINISTRATION EXPENSES XXXX YYYY
===== ====

Page 60 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT 2 BIT Standard Accounts Format

Schedule 6: Financial Expenses

(Financial expenses are those expenses incurred due to the usage of financial (monetary) transactions in the business). Listed
below are the some common expenses, which fall under this head. Please remember that this is not an exhaustive list.

20vv 20vu
Nu’000 Nu’000

Bad Debts XXXX YYYY
Bank Charges & other exp. XXXX YYYY
Foreign Exchange hedging losses XXXX YYYY
Prov. for Bad & Doubtful Debts XXXX YYYY
Provision for any Doubtful Advances XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL Financial Expenses XXXX YYYY
==== ====
Schedule 7: Inadmissible Direct Expenses
20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL XXXX YYYY
==== ====

Schedule 8: Inadmissible Selling Expenses
20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL XXXX YYYY
===== =====

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 61
FORM BIT 2 BIT Standard Accounts Format

Schedule 10: Inadmissible Financial Expenses
20vv 20vu
Nu’000 Nu’000
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
——— ———-
TOTAL XXXX YYYY
==== =====

Schedule 11: Appropriations
20vv 20vu
Nu’000 Nu’000
Salary Claimed XXXX YYYY
Salary Allowable XXXX
YYYY
Excess Salary XXXX YYYY
Dividends inadmissible as expenses XXXX YYYY
Other Appropriations:
Donations Claimed XXXX YYYY
Donations Allowable XXXX
YYYY
Donations Inadmissible XXXX YYYY
Interest Allowable XXXX
YYYY
Interest Inadmissible XXXX YYYY
Income appropriations XXXX YYYY
…………………………. XXXX YYYY
——— ———
TOTAL XXXX YYYY
===== =====

Schedule 12: Bonuses disallowed

20vv 20vu
Nu’000 Nu’000
Bonus Claimed XXXX YYYY
Initial Assessed Net profit (A) XXXX
YYYY
NP from which 10% value is calculated XXXX YYYY
Bonus Allowable as per 10% rule XXXX
YYYY
Bonus Claimed: XXXX YYYY
Bonus Disallowed due to regulation or inadequate supporting (
XXXX) (YYYY)
Bonus Allowable as per bookings XXXX
YYYY

Total bonuses to be disallowed

Bonus Disallowed due to regulation or inadequate supporting XXXX YYYY
Bonus Disallowed due to the difference as mentioned above XXXX
YYYY
Total Bonus disallowed XXXX YYYY

=== ===

Page 62 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT 2 BIT Standard Accounts Format

Schedule 13: Entertainment and Staff Welfare disallowed
20vv 20vu
Nu’000 Nu’000
Ent/Staff Welfare Claimed (club all these exps) XXXX YYYY
Initial Assessed Net profit (A) XXXX
YYYY
NP from which 2% value is calculated XXXX YYYY
Ent/Staff Welfare Allowable as per 2% rule XXXX
YYYY
Ent/Staff Welfare Claimed (club all these exps) XXXX YYYY
Ent/Staff Welfare Disallowed due to inadequate supporting (XXXX
) (YYYY)
Ent/Staff Welfare Allowable as per bookings XXXX
YYYY

Total Ent/Staff Welfare to be disallowed

Ent/Staff Welfare Disallowed due to inadequate supporting XXXX YYYY
Ent/Staff Welfare Disallowed due to the difference as mentioned above XXXX
YYYY
Total Ent/Staff Welfare disallowed XXXX YYYY

Schedule 14: Fixed Assets
20vv 20vu
Nu’000 Nu’000
Additions in the year: Date Rate
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
Less:
Disposals in the year Date Rate
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
Cost brought forward from previous year XXXX YYYY
———- —-.——
Cost carried forward to next year XXXX YYYY
===== ====

Depreciation for year:

Asset: Cost Rate

……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY
……………………………… ……. ……. XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 63
FORM BIT 2 BIT Standard Accounts Format
——— ———
TOTAL DEPRECIATION FOR YEAR XXXX YYYY
Less: Depreciation on Disposals
Disposals: Date Rate
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)
……………………………… ……. ……. (XXXX) (YYYY)

Depreciation brought forward from last year XXXX YYYY
———- ———-
Depreciation carried forward to next year XXXX YYYY
==== ====

Net Book Value brought forward from last year XXXX YYYY
===== =====
NET BOOK VALUE CARRIED FORWARD TO NEXT YEAR XXXX YYYY
===== =====

Schedule 15: Current Assets
20vv 20vu
Nu’000 Nu’000

Cash XXXX YYYY
Bank XXXX YYYY

Page 64 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM BIT 2 BIT Standard Accounts Format

Total Other XXXX YYYY
——— ———
TOTAL CURRENT ASSETS XXXX YYYY
===== =====

Schedule 16: Current Liabilities
20vv 20vu
Nu’000 Nu’000
Bank Overdraft XXXX YYYY
Unpaid Wages XXXX YYYY
Unpaid Taxes XXXX YYYY

Trade Creditors:
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Trade Creditors XXXX YYYY

==== ====

Shareholders Funds:
Ordinary Shares XXXX YYYY
Preference Shares XXXX YYYY

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 65
FORM BIT 2 BIT Standard Accounts Format

…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Shareholders Funds (B) XXXX YYYY

Donor or other Financing: (Capital Grants)
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Donor or other Financing (Capital Grants) (C) XXXX YYYY
——— ———
TOTAL LONG TERM CAPITAL (A+B+C) XXXX YYYY
===== =====

Schedule 18: Long Term Loans

Long Term Loans:

Bank of Bhutan XXXX YYYY
Royal Monetary Authority XXXX YYYY
Royal Insurance Corporation of Bhutan XXXX YYYY
Bhutan Development Finance Corporation XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
Total Long Term Loans (A) XXXX YYY
Donor Financing (Liability):
…………………………. XXXX YYYY
…………………………. XXXX YYYY
…………………………. XXXX YYYY
………………………… XXXX YYYY
…………………………. XXXX YYYY

Total Donor Financing (liability) (B) XXXX YYYY

Page 66 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM PIT-1 PIT REGISTRATION

ROYAL GOVERNMENT OF BHUTAN
REGIONAL REVENUE & CUSTOMS OFFICE
_________________________

Date:_____

1. PERSONAL DETAILS
Name: _________________________________________
Sex (Male or Female) _________________________________________
Date of Birth: _________________________________________
Occupation: _________________________________________
ID No./Resident Permit No: _________________________________________
Father’s Name _________________________________________
Mother’s Name _________________________________________

2. PERMANANT ADDRESS
House No: ______________________________________________________
Thram No: ______________________________________________________
Village: ______________________________________________________
Gewog: ______________________________________________________
Dzongkhag: ______________________________________________________
Nationality (If not a Bhutanese) ________________________________________________

3. PRESENT ADDRESS
Address: ______________________________________________________
Tel No. (O) ______________________________________________________
(R) ______________________________________________________
Post Box No: ______________________________________________________
Fax No: ______________________________________________________
Email Address: ______________________________________________________

4. MARITAL STATUS
a) Are you married? (Please tick)
Yes
No

b) If yes, please fill in the particulars of your spouse.

Sl
No Spouse’s Name Citizen ID No./
Resident Permit No. Region of
Registration Source of Income

If required, please use additional sheet.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 67
5. CHILDREN’S DETAILS
Do you have children? (Please tick)
Yes
No

b. If yes, please fill in the particulars of your child/children
Name of Child Date of Birth Sources of Income Income Clubbed with

If required, use additional sheet.

6. SOURCES OF INCOME

Do you have any sources of personal income? (Tick)

a) Salary Income
b) Rental Income
c) Dividend Income
d) Interest income
e) Cash crop Income
f) Income from Other source s

PLACE OF REGISTRATION
a. Where do you want to register? (Tick one)

RRCO, Thimphu
RRCO, Paro
RRCO, P/ling
RRCO, Samste
RRCO, Gelephu
RRCO, S/jonkha

TAX PAYERS DECLARATION

I hereby declare that the information given in this Form is true and correct to the best of
my knowledge and belief. In case if any information is found untrue and false, I shall be
liable for fines and penalties as per Chapter 5 of the General Provisions of the Income Tax
Act of the Kingdom of Bhutan, 2001.

Signature of the Individual: __________________________________
Name of the Individual: __________________________________
Date: __________________________________

Page 68 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
Instructions:
(Please note instructions numbered below correspond to the numbers in the Form, and it must be read together)

a) ID Card No/ R. Permit No. refers to Citizen Identity Card Number for Bhutanese citizens, and Resident
Permit No is the Resident permit No issued by the Department of Immigration and Census for non
Bhutanese.

b) Permanent Address means the place where your census is registered or where census records are located.

c) Present address means the place where you are currently residing as a result of work, business etc.

d) If you are married, fill in the details of your spouse as laid out in Table 4(b). Place of registration means the
RRCO where the spouse was previously registered before marriage. As per Part III, Chapter 1, Section 2,
of the Income Tax Act of the Kingdom of Bhutan, 2001, all married couples must choose the same RRCO
for registration. Source of income refers to source of income of your spouse.

e) If you have children, fill in the details of your children as laid out in Table 5(b) . Source of income means
source of income of your child. Income clubbed with means the name of the parent with whom the child’s
income has been clubbed with for personal income tax purpose.

f) Source of income means the source of your personal income, and not of your spouse and children.

g) Place of registration is the place where you want to register for personal income tax purposes. You can
register in only one RRCO as a taxpayer.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 69
FORM PIT-2 PERSONAL INCOME TAX RETURN

PERSONAL INCOME TAX RETURN FOR THE INCOME YEAR __________

ROYAL GOVERNMENT OF BHUTAN
REGIONAL REVENUE & CUSTOMS OFFICE
_______________________________

1.
TAXPAYERS PARTICULARS (Please fill the following)

Name:
(write in block letters)
a. Permanent address:

b. Present address:
Telephone No:

Citizen ID No/
Residence permit No
Nationality:
Date/Year of birth:

2.
MARITAL STATUS

Are you married? Please tick yes or no
Yes No
If married, please fill in spouse’s particulars:

Spouse’s Name:

Telephone No: Previous Place of Registration:
Citizen ID Number/
Residence Permit No
Nationality:
If required, please use additional sheet.

3. DETAILS OF CHILDREN

Does your Tax Return include income of children below 18 years of
age? If yes please enter their details.
Child’s Name:
Date of Birth Source of Income
included in the Return

If required, please use additional sheet.

Page 70 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
4. INCOME COMPUTATION WORKSHEET
4.1 GROSS INCOME FROM SALARY AND CONSULTANCY SERVICES (If you have/had income from salary or consultant
fees, please fill in the following)
Employer’s name and address:

Basic Salary x12 months
Allowances
Bonus
Fees
Employer’s TPN or ACS code: Commission Total from employer 1
Any other Benefits
Employer’s name and address:
(If you have more than one
employer)

Basic SalaryX12months
Allowances
Bonus
Fees
Employer’s TPN or ACS code: Commission Total from employer 2
Any other Benefits
Employer’s name and address:
(If you have more than two
employers)

Basic SalaryX12 moths
Allowances
Bonus
Fees
Employer’s TPN or ACS code: Commission Total from employer 3
Any other Benefits
AGI (i): Add the totals from employers to give Gross Salary Income (Transfer the amount to
Table No 5)
If required, please use additional sheet.

4.2 GROSS INCOME FROM RENTAL PROPERTY [(If you own rental property/properties and have a rental income, please fill
in the following (Rental property includes land, building and houses used for rental purpose)]

Type of Property Plot No./Thram No. No of Units/ No of
Plots
Location Property’s Rental
Income

A: Gross Rental Income for all properties (add the above)
B1: Interest paid on loans (enclose bank statement)
B2: Repair and maintenance (20 %) of A
B3: Insurance Premiums
B4: Local taxes
B: Total Specific Deductions/Exemption (add the four above: B =
B1+B2+B3+B4)
AGI (ii) Adjusted Gross Rental Income (A – B) (If positive, transfer
the amount to Table No 5)
If required, please use additional sheet.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 71
4.3 GROSS INCOME FROM DIVIDEND ( If you have received dividend, please fill in the following)
Name of Company TPN Share Certificate
No.
No. of Shares Face Value of
Shares
Dividend

A: Gross Dividend Income from all companies (add the above)
B1: Interest paid on loans (enclose loan documents)
B2: Exemption 10,000
B: Total Specific deductions/Exemption (add the two above B= B1+B2)
AGI (iii) Adjusted Gross Dividend Income (A – B) (If positive, transfer the amount to Table No 5
If required, please use additional sheet.

4.4 GROSS INCOME FROM INTEREST ( If you have fixed deposit accounts with a financial institution, please fill in the following)
Financial Institutions Single or Joint
Account
Account No. Interest Received

A: Gross Interest from all Financial Institutions. (add the above)
B: Specific Deductions/Exemption 10,000
AGI (iv) Adjusted Gross Interest Income (A – B) (If positive, transfer the amount to
Table No 5)
If required, please use additional sheet.

4.5 GROSS INCOME FROM CASH CROP (If you own any orchards (apple, orange and cardamom), please fill in the following)
Type of orchard Plot No./Thram No Locations Gross Income from Sales

A: Gross Income from all Orchards (add the above)
B: Specific Deduction/Exemption (30 % of A)
AGI (v) Adjusted Gross Income from Cash Crops (A – B) (If positive, transfer
the amount to Table No 5
If required, please use additional sheet.

Page 72 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
4.6 GROSS INCOME FROM OTHER SOURCES (If you have received any income from other sources, please fill in the
following)
Type of Income Name and Address of person from whom
received
TPN or ACS Code Income

A: Gross Income from all other Sources (add the above)
B: Specific Deduction/Exemption (30 % of A)
AGI (vi) Adjusted Gross Income from Other Sources (A – B) (If positive, transfer the amount to
Table 5
If required, please use additional sheet.

5. TOTAL OF YOUR ADJUSTED GROSS INCOME (Transfer Adjusted Gross Incomes from the preceding worksheets
numbered AGI (i), AGI (ii), AGI (iii), AGI (iv), AGI (v), AGI (vi) to the table below to arrive at your NET TAXABLE INCOME.
Sources of income: Net Taxable Income
(Nu.)
Worksheet
Nos
1. Adjusted Gross Income from Salary 4.1
2. Adjusted Gross Income from Real Property 4.2
3. Adjusted Gross Income from Dividend 4.3
4. Adjusted Gross Income from Interest 4.4
5. Adjusted Gross Income from Cash Crop 4.5
6. Adjusted Gross Income from Other Sources 4.6
TOTAL ADJUSTED GROSS INCOME
Less: General Deductions
a. Donations (up to max 5% of Total Adjusted Gross Income)
b. Education Allowance (up to max Nu. 50000 p.a)

Add 4.1 to 4.6
and minus
General
Deductions
NET TAXABLE INCOME

6. CALCULATION OF SELF-ASSESSED TAX. Use the Net Taxable Income above and calculate your TAX AMOUNT .
Income Slabs: Allocation of Taxable Income Tax Amount
Up to Nu. 100,000 0
Nu. 100,001 – 250,000 0 + 6% of (Net Taxable Income –100,000)
Nu. 250,001 – 500,000 9,000 + 9% of (Net Taxable Income – 250,O00)
Nu. 500,001 – 1000,000 31,500 + 12% of (Net Taxable Income – 500,000)
Nu. 1000,001 & above 91,500 + 15% of (Net Taxable Income – 1000,000)
TAX AMOUNT

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 73
7. TAXES PAID QUARTERLY/TAXES DEDUCTED AT SOURCE (if you have taxes already prepaid or deducted at source,
please fill in the following)
Income Source: Tax Deducted at Source Amount (Nu.):
Salary
Rental
Dividend
Interest
Other Income
Total TDS (Add the five amounts above)

8. FINAL TAX PAYABLE AT THE TIME OF FILING

Tax Amount (from table 6)
Less Tax Deducted at Source (from table 7)
Tax Payable/Refundable at the time of filing the Tax Return (1-2)

TAX PAYERS DECLARATION

I hereby declare that the information given in this Form and the supporting document
attached herewith are true and correct to the best of my knowledge and belief. In case any
information is found incorrect, I assume full responsibility thereof and shall be liable for fines
and penalties as per Chapter 5 of the General Provisions of the Income Tax Act of the
Kingdom of Bhutan, 2001.

Signature of the taxpayer :
Taxpayer Account No. Authorized representative*:
Date :

* A letter of authorization from the taxpayer must be attached.

For Official Use Only

Deposited Vide Money Receipt No. _______________________ dated_____________________
Month____________________Year___________________.

Received and Verified by ________________________________________________
(Name & Signature) ________________________________________________
________________________________________________
Remarks ________________________________________________
________________________________________________
Instructions overleaf

Page 74 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
Instructions on filing PIT Annual Tax Return

GENERAL INFORMATION

1. WHO MUST FILE A TAX RETURN?
ƒ A citizen above 18 years of age.
ƒ Minor below 18 years of age having income from sources as mentioned below in 3
ƒ Resident earning personal income from sources as mentioned below in 3
ƒ Any other person not a citizen or a resident but having personal income from sources in Bhutan or for work
performed in Bhutan.
ƒ A person having total gross income from sources mentioned below in 3 exceeding Nu. 100,000 per annum.

2. HOW TO FILE?
ƒ Husband and wife must file a separate tax return but at the same RRCO.
ƒ Income of minors (individuals under 18 years of age) must be clubbed with one of the parent’s income and file
together with the parent.
ƒ Where a minor has a guardian appointed by the Court, income of the minor must be filed separately.

3. WHAT ARE THE SOURCES OF INCOME UNDER PERSONAL INCOME TAX?
ƒ Salary income from employment or consultancy services.
ƒ Rental income from properties such as land, building and houses.
ƒ Dividend income from shareholdings in a company.
ƒ Interest income from fixed deposit accounts.
ƒ Cash crop income from apples, oranges and cardamom orchards.
ƒ Income from other sources such as hiring of privately owned vehicle, plant and machinery, and intellectual
property rights.

4. WHERE AND WHEN TO FILE YOUR TAX RETURN?
Tax return must be filed within 1 st March 2003 at the Regional Revenue & Customs Office (RRCO)
where you have registered as a taxpayer.

5. WHAT DOES INCOME YEAR MEAN?
Income year means the calendar year starting 1 st January and ending on the 31 st December.

DEFINITIONS
a) Gross Income means total income from a particular income source before specific deduction(s)/ exemptions.
b) Specific Deduction(s)/Exemption(s) means deduction(s)/exemption(s) allowable against a specified source of
income.
c) Total Gross Income means total income from all sources under PIT before specific deduction(s)/exemption(s).
d) Adjusted Gross Income means gross income after allowing specific deduction(s)/ exemption(s).
e) Total Adjusted Gross Income means total of the adjusted gross income(s) from all income sources.
f) General Deductions means deductions allowable against total adjusted gross income to arrive at Net Taxable
Income.
g) Net Taxable Income means total adjusted gross income after allowing general deductions. Tax rates are
applied to Net Taxable Income to arrive at the Tax Amount.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 75
TABLE 1 INSTRUCTION
Table 1 requires you to fill in your personal details.
6.2 Name is your registered name and it should correspond to the name in your census register.

6.3 ID Card No. is your Citizen Identity Card Number for Bhutanese citizens, and Resident Permit No is the Permit No. issued by
the Department of Immigration and Census for non-Bhutanese.

6.4 Permanent Address means the place where your census is registered or where census records are located.

6.5 Present Address is the place where you are currently residing as a result of work, business etc.

6.6 If you do not know the date of birth, please mention the year of birth.

TABLE 2 INSTRUCTIONS
Table 2 requires you to fill in the details of your spouse.
h) Name is the registered name of your spouse and it should correspond to the name in the census register or Resident Permit
No as the case may be.

i) ID Card No. is your spouse’s citizen Identity Card Number if your spouse is Bhutanese citizen, and Resident Permit No. is
your spouse’s Resident permit No issued by the Department of Immigration and Census if your spouse is non-Bhutanese.

j) Previous Place of Registration is the place or RRCO where the spouse was previously registered before marriage. All married
couples must choose the same RRCO for registration as per Chapter 1, section 2, Part III of the Income Tax Act of the
Kingdom of Bhutan, 2001.

TABLE 3 INSTRUCTIONS
Table 3 requires you to fill in the details of your children below 18 years of age clubbing their income with your income.
a) If you have children clubbing income with your income in the annul tax return, please fill in name, date of birth of your child,
and source of income included in the return.

TABLE 4 INSTRUCTIONS
Table 4 requires you to fill in the details of your personal income source wise.

Table 4.1: Gross Income from Salary and Consultancy Services
6.7 Name of Employer & Address is the name of the employer(s) from whom you receive your salary income during the income
year. Address should include business address and Phone No. of your employer(s).

6.8 TPN is the No. allotted by the Department of Revenue & Customs to a company or business unit, and ACS code is the
agency code allotted by the Department of Budget and Accounts if your employer is a Government Agency.

6.9 Basic Salary is pay and wages as mentioned in your salary statement. It is exclusive of allowances and benefits.

6.10 Consultancy Fees is the fees received by non-licensed consultants or freelance consultants. It includes any fee received by
you besides your salary.

6.11 Bonus is bonus received during the income year, if any.

6.12 Allowances is allowances received during the income year. It includes technical, professional, production, flying incentives
or allowances.

6.13 Benefits is benefits received by you in addition to the ones mentioned above during the income year. It includes any other
benefits such as free accommodation, free electricity and gas, paid holidays, free transport, and any form of perks and fringe
benefits, remuneration etc. The value of such benefits will be the actual cost incurred by the employer in providing such
benefits to you and it should be converted in terms of money.

Page 76 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
6.14 Total from Employer is the sum total of basic pay, consultancy fees, bonus, allowances, benefits from a single employer.

6.15 Gross Salary is the total of gross salary income received from all employers, if you have more than one employer. Your
gross salary income and Adjusted Gross Salary Income will be the same as there is no deduction under income from salary.

Please remember to enclose all supporting documents relating to your salary income such as certificates of TDS, and pay slips from
your employer for adjustment and verification at the time of filing.

Table 4.2: Gross Income from Rental Property such as Land, Building and Houses
a) Type of property is whether property is land, house or building.
b) Plot No./Thram No. is the No. allotted by City Corporation or Municipal/Dzongkhag.
c) No of Units/No of Plots is the No of units/plots of the real property generating rental income depending on whether the
property is land or building/house.
d) Location is the location of the real property.
e) Rental Income is the income received as rent from the real property.
f) Gross Rental Income is the total amount of income received as rent.
g) Interest is the interest paid on loans availed for purchase or construction of the real property generating rental income. It
must be supported by relevant documents such as loan agreement, bank statement, and receipts.
h) Repair and Maintenance is 20 % of the gross rental income.
i) Insurance Premium is the total insurance premiums paid for the real property generating rental income. It must be
supported by relevant documents/receipts.
j) Local Taxes is municipal taxes and urban house taxes paid for the real property generating rental income. It must be
supported by relevant documents/receipts.
k) Specific Deductions/exemption is the total deductions/exemption under rental income.
l) Adjusted Gross Rental Income is Gross Rental Income after specific deductions/exemption.

Please remember to enclose all supporting documents relating to your rental income such as certificates of TDS for verification and
adjustment at the time of filing.

Table 4.3: Gross Income from Shareholdings in a Company
a) Name of Company is the name of the company from whom you receive your dividend income.
TPN is the company’s TPN allotted by the Department of Revenue & Customs.

b) Share Certificate No. is the number of the share certificate.

c) No. of Shares is the number of shares owned.

d) Face Value of Share is the value of share given in the share certificate.

e) Amount of Dividend is the total amount of dividend received from the shareholdings.

f) Interest is the interest paid on loans to purchase shares. It must be supported by relevant document/receipts such as loan
statements and bank statements.

g) Gross Dividend Income is the total dividend income received from all your shareholdings.

h) Adjusted Gross Dividend Income is the gross dividend income after specific deductions/exemption.

Please remember to enclose all supporting documents relating to your Dividend Income such as TDS certificates, bank statements
and loan statements for verification at the time of filing.

Table 4.4: Gross Income from Fixed Deposits
a) Name of Financial Institutions is the name of financial institutions where you maintain your fixed deposit accounts.

b) Type of Account is whether it is a single or joint account.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 77

c) Account No. is the account number given by the financial institution maintaining your accounts.

d) Interest is the actual interest received from fixed deposits accounts. It must be supported by relevant documents such as
bank statements.

e) Gross Interest Income is the total interest income received from your fixed deposit accounts.

f) Adjusted Gross Interest Income is gross interest income after specific deductions/exemption.

Please remember to enclose all supporting documents relating to your Interest Income such as TDS certificates, and bank statements
for verification and adjustment at the time of filing.

Table 4.5: Gross Income from Cash Crop orchards (orange, cardamom, apple)
a) Type of Orchard is whether it is apple, orange or cardamom orchard.

b) Plot No./Thram No. is the number allotted by municipal corporation/Dzongkhag

c) Location is the location of your orchard.

d) Gross Income from sale is the amount received from sale of cash crops.

e) Deduction is 30% of the gross income from sales.

f) Adjusted Gross Income from cash crop is the total income from sale of cash crops after specific deductions/exemption.

Please remember to enclose all supporting documents relating to your Income from cash crops for verification and adjustment at the
time of filing.

Table 4.6: Gross Income from Other Sources such as hire of privately owned vehicles, plant &machinery, and
intellectual property rights
a) Type of Income is income received from hire of privately owned vehicles, plant & machinery, intellectual property such as
copyrights, patents, trademarks etc.

b) Name and Address of person(s) from whom received is the name and address of person(s) making payments.

c) TPN is the No. allotted by the Department of Revenue & Customs to a company or business unit, and ACS code is the
agency code allotted by the Department of Budget and Accounts if the person(s) making payment is a Government
Agency.

d) Income is the amount of income received by you.

e) Specific Deductions/Exemption is 30% of the gross income from other sources received by you.

f) Adjusted Gross Income from Other Sources is the total gross income from other sources after specific
deductions/exemption.

Please remember to enclose all supporting documents relating to your Income from other Source such as TDS certificates for
verification and adjustment at the time of filing

TABLE 5 INSTRUCTIONS
Table 5 requires you to add all your Adjusted Gross Incomes by transferring the amounts from Tables 4.1 to 4.6.
a) Transfer the amounts from Table 4.1 to 4.6, that is, from the last row of the tables numbered AGI (i), AGI (ii), AGI (iii), AGI
(iv), AGI (v), and AGI (vi) to its respective places in Table 5.

Page 78 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
6.16 If you have made donations as per Section 12, and claim education allowance as per section 12.1 of the Act, enter the
actual amounts. You must attach all relevant documents/receipts to support your claim.
6.17 Add all your Adjusted Gross Incomes as transferred from Table 4.1 to 4.6 and deduct donations and education allowance
to arrive at your Net Taxable Income

TABLE 6 INSTRUCTIONS
Table 6 requires you to calculate the Tax Amount by applying the rates prescribed in Table 6 on the Net Taxable Income (Table 5). If
you have problems in calculating, you can obtain a copy of a computer spreadsheet from your Regional Revenue and Customs Office.

TABLE 7 INSTRUCTIONS
Table 7 requires you to fill in the details of Tax Deducted at Source (TDS) for sources of income mentioned in the Table (that is,
salary income, rental income, dividend income, interest income, and income from other sources)

All TDS must be supported by relevant documentary proofs such as TDS certificates.

TABLE 8 INSTRUCTIONS
Table 8 requires you to determine the balance tax payable by you or refundable to you at the time of filing. Deduct all TDS from the
Tax Amount as calculated in Table 6. If it is a positive amount it is tax payable by you at the time of filing, and if it is a negative
amount, then it is a tax refundable to you by RRCO.

IMPORTANT NOTES
a) Set off is allowed only within the same source of income, but not between different sources of income.

b) When you complete filling this Form, please remember to put date and signature.

c) If you have enclosed all necessary documentation along with the your Tax Return, then you can expect to get a Demand
Notice from the concerned RRCO (with additional tax to be paid by you or tax to be refunded to you) within 30 days of
filing the Tax Return.

d) If you do not agree with the assessed tax amount you can send a written appeal to the RRCO within 30 days from the
date of issue of the Demand Notice along with supporting documents and reasons thereof.

e) Husband and wife are required to file at the same RRCO.

g) Income of minors (individuals under the age of 18) must be clubbed with one of the parent’s income. Where a minor has a
guardian appointed by the Court, income of the minor must be filed separately.

h) Should you find the space provided in the Form is not adequate enough, additional sheets may be used and attach the
same along with the return.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 79
CHECKLIST OF REMINDERS

Have you filled in the details of your personal income correctly in Table 1 to Table 8? To ensure correct declaration and to avoid,
please check once again.

9 Have you enclosed TDS certificates for the following?
ƒ Salary Income

ƒ Rental income

ƒ Dividend Income

ƒ Interest Income

ƒ Income from Other sources

9 Have you enclosed all supporting documents and receipts for
ƒ Interest paid on loans for real property,

ƒ Insurance premium paid for real property,

ƒ Local taxes paid for real property,

ƒ Interest paid on loans for buying shares.

9 Have you enclosed bank statements for interest income?

9 Have your specified whether your fixed deposit account is a single or joint account?

9 Have you transferred the amounts from Table 4.1, 4.2, 4.3, 4.4, 4.5, and 4.6 correctly to Table 5? To ensure correct
computation, please check once again.

9 Have you enclosed all supporting documents relating to donations and education allowance?

9 Have you calculated your Tax Amount correctly in Table 6?

9 Have you put your Name & Signature?

Page 80 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 FORM IT-1 MONTHLY SALARY SCHEDULE

Salary Schedule for the month of _______________________ Year_______________________

Name of the Employer/Organization:
TPN/ACS:
Address:

Sl.No.
Name of Employee 1 2 3 4 5 6 7 8 9 10
Citizen I.D No. Resident
Permit No Employee ID
No. Basic
Salary Benefit /
Allowance Gross
Salary TDS from
Gross
Salary Health
Contrib. Total Remarks

The above amount of Nu. _____________is remitted by cash/cheque No. _______ dated _______ to _____________being the deposit of TDS on Salary
Income and Health Contribution for the month of ____________________.

Name and Signature of the Disbursing Officer
Seal of Employer

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 81
Instructions

As per Section 19 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan 2001, this form must be completed and submitted to the concerned Regional
Revenue & Customs Office by all employers including RGR accounts holders on a monthly basis. All employers are required to deduct tax at the time of payment as
prescribed in Annexure III and deposit to the concerned RRCO on or before the 10
th of the following month (for more details see Rule No. 3.2.2 (a) of General Provisions).

a)
Column 1 refers to the Citizen ID of Bhutanese Nationals. Where Citizen ID is “under process” it must be stated in the Remarks Column 10, and a temporary ID
No. shall be issued by the RRCO for tax purpose.
b)
Column 2 refers to the Resident/Work Permit No. issued by the Department of Immigration & Census for Non- Bhutanese employees.
c)
Column 3 refers to the employee ID No. issued by the employer if it exists.
d)
Gross Salary in column 6 refers to the basic salary (4) + benefits/allowances. Please note that Salary tax is to be calculated on the Gross Salary.
e)
Benefits/Allowances includes everything received in money or monies worth from the employer but does not include Leave Travel Concession (LTC), Traveling
and Daily Allowance (TA/DA) while on tours.
f)
To ensure correct computation of tax and timely refund/adjustment of taxes when the Tax Return is filed, it is of paramount importance that the information
submitted is complete and correct.

Page 82 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 FORM IT-2 INCOME FROM REAL PROPERTY

Tax Deducted at Source On Income from Real Property for the period__________to _________Year ________

Name of Withholding Agent:
TPN/ACS:
Address:

Sl.
No.
Name & Address 1 2 3 4 5 6 7
Citizen I.D No./
TPN Type of
Property No of Units/Plot
Rented Location Amount
TDS @5% Remarks

The above amount of Nu. _____________is remitted by cash/cheque No. _______ dated _______ to _____________being the deposit of TDS on Income
from Real Property of the person(s) mentioned above.

Name and Signature of the Authorized Signatory

Seal of Withholding Agent

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 83 Instructions As per Section 19 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001, this form must be completed and submitted to the concerned RRCO by all by
all government, semi-government, NGO’s, company and business entities, including RGR account holders, making rental payments for the hire of real property as defined under Rule
No. 3 of the Rules. All withholding agencies are required to deduct TDS at the time of payment @ 5% of the gross payment and deposit the same in to an RGR account or to the
concerned RRCO on or before the 10
th of the following month (for more details see Rule No. 3.2.2 (b) of General Provisions).

a)
Name & Address refers to the name & address of the person(s) to whom the rental payment is made.
b)
Column 2 refers to whether the property is land, building, house, cottage, factory building etc.
c)
Column 3 refers to No of Plots/Units depending on whether the rented property is land or building/houses.
d)
Column 4 refers to the location of the rented property.
e)
Column 5 refers to the amount of rental income from real property.
f)
To ensure correct computation and timely refund/adjustment of taxes when the Tax Return is filed, it is of paramount importance the information submitted is complete
and correct.

Page 84 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 FORM IT-3 INCOME FROM DIVIDEND

Tax Deducted at Source on Income from Dividend for __________

Name of Company:
TPN:
Address:

Sl.
No.
1 2 3 4 5 6 7 8
Name & Address of the
Shareholder Citizen I.D
/TPN Share
Certificate No. No of Shares Face Value of
Shares Dividend (%) Dividend Amount TDS @10%

The above amount of Nu. _____________is remitted by cash/cheque No. _______ dated _______ to _____________being the deposit of TDS on Income
from Dividend of the person(s) mentioned above.

Name and Signature of the Authorized Signatory of the Company
Seal of the Company

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 85 Instructions:

As per Section 19 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001, all companies distributing dividend to its shareholders must deduct tax at
source @ 10% on the day of payment, and deposit the same to the concerned RRCO on or before the 10
th of the following month. Please note that for citizens and residents
receiving dividend more than Nu. 10,000, and for persons other than citizens and residents deduction shall be on the Total Dividend paid out. However, for citizens and residents
receiving dividend income below Nu 10,000, no TDS deduction shall be applied. (for more details see Rule No 3.2..2 (c) of General Provisions of the Rules). This Form must be
completed and submitted by all companies distributing dividend and information must be furnished on all shareholders receiving dividend income whether TDS is deducted or not.

a)
Column 1 refers to the Citizen ID of Bhutanese Nationals. Where Citizen ID is “under process” it must be stated and a temporary ID No. shall be issued by the RRCO for
tax purpose. Where the recipient is a company or business the TPN or entity code must be provided.
b)
The information indicated in column 1,2,3,4, & 5 must be provided initially for compilation of information. Information in column No. 6,7, & 8 are to be furnished as and
when dividends are paid.
c)
Information must be furnished on all dividends paid irrespective of the amount.
d)
To ensure correct computation of tax and timely refund/adjustment of taxes when the Tax Return is filed, it is of paramount importance the information submitted is
complete and correct.

Page 86 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
FORM IT-4 INCOME FROM INTEREST

Tax Deducted at Source on Income from Fixed Deposits for the period ____________

Name of the Financial Institution:
TPN:
Address:
Branch:

Sl. No Name & Address of the
Account Holder Citizen I.D./
TPN A/C No/
NN. Total Interest Income TDS @ 5%

The above amount of Nu. _____________is remitted by cash/cheque No. _______ dated _______ to
_____________being the deposit of TDS on Income from Interest of the person(s) mentioned above.

Name & Signature of the Authorized Signatory
Seal of Withholding Agent

Instructions
As per Section 19 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001, all financial
institutions paying interest to its fixed deposit accounts holders must deduct tax at source @ 5% at the time of payment
or when the interest is credited to the account holder’s account, and deposit the same to the concerned RRCO on or
before the 10
th of the following month. Please note that for citizens and residents receiving interest income more than
Nu. 10,000, and for persons other than citizens and residents deduction shall be on the Total Interest paid. However,
for citizens and residents receiving interest income below Nu 10,000, no TDS deduction shall be applied (for more details
see Rule No 3.2.2 (d) of General Provisions of the Rules). This Form must be completed and submitted by all financial
institutions paying interest and information must be furnished on all fixed deposit account holders receiving interest
whether TDS is deducted or not.
a) Column 1 refers to the Citizen ID of Bhutanese Nationals, or NN (non national). Where Citizen ID is “under
process” it must be stated and a temporary ID No. shall be issued by the RRCO for tax purposes. Where the
recipient is a company or business the TPN or entity code must be provided.
b) Information must be furnished on all interest paid out irrespective of the amount.
c) To ensure correct computation of tax and timely refund/adjustment of taxes when the Tax Return is filed, it is
of paramount importance that the information submitted is complete and correct
.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 87 FORM IT-5 INCOME FROM OTHER SOURCES

Tax deducted at source on Income from Other Sources for the period__________ to _________Year ______

Name of the Organization:
TPN/ACS:
Address

Sl.
No. Name & Address 1 2 3 4 5 6
Citizen I.D No. Account Head Invoice/Voucher No. &
Date Invoice/Voucher
Amount TDS @ 5% Remarks

The above amount of Nu. _____________is remitted by cash/cheque No. _______ dated _______ to _____________being the deposit of TDS on Income from
Other Sources of the person(s) mentioned above.

Name and Signature of the Authorized Signatory
Seal of Withholding Agent

Page 88 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Instructions

As per Section 19 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001, this form must be completed and submitted to the concerned RRCO by all by all
government, semi-government, NGO’s, company and business entities, including RGR account holders, deducting tax from payments made to individuals for the hiring of vehicles,
plant/machinery and intellectual property rights. All withholding agencies are required to deduct TDS at the time of payment @ 5% of the gross payment and deposit the same in to an
RGR account or to the concerned RRCO on or before the 10
th of the following month (for more details see Rule No. 3.2.2 (e) of General Provisions).

a)
Column 1 refers to the Citizen ID of Bhutanese Nationals, where Citizen ID is “under process” it must be stated in the Remarks Column 6, a temporary ID No. shall be issued by
the RRCO for tax purpose
b)
Column 2 refers to the type of services hired such as hire of vehicle, plant or machinery etc.
c)
To ensure correct computation of tax and timely refund/adjustment of taxes when Tax Return is filed it is of paramount importance the information submitted is complete and
correct.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 89
FORM IT-6 TDS FROM TOUR INCOME

To
The Regional Director,
Regional Revenue & Customs Office,
_________________________

Sir,

Please find below details of payments on account of 2% TDS on tour income.

Sl.
No. Name & Address of
Operator TPN Gross Income
Received in Nu. Amount of
Royalty
Paid Net Income TDS @ 2%

Name & Signature of the Authorized Signatory

Instructions

a)
This form is to be filled by the Department of Tourism and forwarded to the nearest RRCO on or before the
10th of the following month.
b) The amount deducted at source must be deposited into a RGR account immediately or on the day following the
receipt of the payment from tourists/agencies abroad.
c) A copy of the duly filled form must be sent to the tour operator for information.
d) Failure to comply with the above shall result in fines & penalties as per Chapter 5, Section 34, of the General
Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001

Page 90 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 FORM IT-7 SCHEDULE OF TDS REMITTANCE FROM CONTRACTORS
Tax deducted at source on Contract Income for the period__________ to _________Year ______

Name of the Organization:
TPN/ACS:
Address:

Sl. No Name of Contractor/Firm &
Address Entity
Code Description of
Work/Supply Bill/Invoice No &
Date Gross
Amount
Disbursed Amount Withheld If Deposited into RGR Accounts
Rate of Tax Amount
(Nu.) Receipt No. &
Date Challan No &
Date

Total

The above amount of Nu. ____________________________ is remitted by Cash/Cheque/Demand draft No ____________________ dated __________
______________ to ____________________________ being the deposit of TDS.

Name & Signature of the Disbursing Officer
Seal of Withholding Agent

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 91 Instructions

As per Section 19 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001, this form must be completed and submitted to the concerned RRCO by all
government, semi-government, NGO’s, company and business entities, including RGR account holders, deducting tax from payments made to a company or business for construction,
logging work, management contracts, supplies, transportation, consultancy and other professional services. All withholding agencies are required to deduct TDS at the time of payment at
the rates mentioned in d) below and deposit the same in to an RGR account or to the concerned RRCO on or before the 10
th of the following month (for more details see Rule 3.2.2(g) of
the General Provisions of the Rules).

a)
Name of the Contractor/Firm Address is the name and address of the party undertaking the contract.
b)
TPN is the Tax Payer Number of the party undertaking the contract.
c)
TDS is applicable on the Gross Running Bill as well as the Advances paid to the party.
d)
The rate of TDS is 2% for licensed national contractors and 3% for non-national contractors.
e)
Revenue Money Receipt No or Depositing Challan No. is money receipt/deposit No. if you have a separate RGR account and deposit directly.

f)
If one of the payments listed above is the first payment against a contract, please attach a copy of the contract agreement.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 92
FORM IT-8 RESTRAINING ORDER

ROYAL GOVERNMENT OF BHUTAN
REGIONAL REVENUE & CUSTOMS OFFICE

_________________________

Ref:
________________________________________________
Sub: ________________________________________________
Date: ________________________________________________

To: ________________________________________________
Address: ________________________________________________
________________________________________________

Dear Sir/Madam,

Your tax/duty is overdue with the following amount:

Income year
XXXX CIT, Nu ______
Income year
YYYY CIT, Nu ______
Income year
ZZZZ PIT, Nu ______
Penal interest 24% on Nu ___ from _______to________ Nu ______
Fines and penalties Nu ______
Total Nu ______
Set-off/Paid Nu ______
Remainder due Nu.______

You have defaulted payment of the agreement dated __.__.200_, and you have not attended the
meeting called on __.__.200_. Therefore, a restraint has been put on your assets as follows:

Date: Asset Description: Model: Year: Prior claims by 3
rd person: Concerned
authorities:
……….
……….
……….

You are hereby informed that on the asset(s) mentioned above, you cannot dispose, sell or borrow
against the asset without prior approval of the tax authority. If you dispose contrary to the restraint
you will be liable to procecution by the Court with a charge of fraudulent disposition of property by a
debtor to the detriment of his creditors.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 93
Penal interest of 24% p.a. is payable until the date of payment. In addition you may be liable for
further fines and penalties as per Chapter 5 of the General Provisions of the Income Tax Act of the
Kingdom of Bhutan, 2001.

You are requested to take approriate steps to clear your due tax/duty within 14 days of the date of
this letter. If you fail to do so, we may put your restrained asset(s) on auction as of Rule 5 of the
General Provisions.

The outstanding tax/duty together with interest will be recovered from the proceeds of the auction,
and a surplus, if any, will be paid to you.

You may appeal in writing within 30 days from the date of issue of this letter as per Chapter 7,
General Provisions of the Income Tax Act of the Kingdom of Bhutan , 2001.

Yours faithfully

Name & Signature of the Regional Director

Witness of Restraint: ____________ ____ Witness of Restraint: _______________
Name and Address: ____________ ____ Name and Address: _______________
________________ _______________

CC to:
_______________________________
_______________________________
______________________________

Page 94 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
ANNEXURE I CATEGORIZATION

SECTOR CATEGORY INVESTMENT RANGE TURNOVER RANGE
Trading
Large More than Nu. 5 million More than Nu.10 million
Medium Between Nu.3 – 5 million Between Nu.6 – 10 million
Small Between Nu.1 – 3 million Between Nu.2- 6 million
Micro Less than 1 million Less than 2 million
Manufacturing
Large More than Nu.100 million

Medium Between Nu. 10 – 100 million
Small Between Nu. 1 – 10 million
Cottage Less than Nu. 1 million
Service
Large More than Nu.10 million More than Nu.20 million
Medium Between Nu. 5 – 10 million Between Nu.10 – 20 million
Small Between Nu.1- 5 million Between Nu.2 – 10 million
Micro Less than 1 million Less than 2 million

Note:

a) All companies and businesses, shall be categorised based on fulfilment of either one of the
criteria.

b) Investment means owners contributions/ paid up share capital plus long term loans.

c) However the construction sector however will be categorised in accordance with the
classification made by the Construction Development Board . That is,
a) All classified ”A Class” contractors will be treated as large,
b) All classified ”B Class” contractors will be treated as medium,
c) All classified ”C Class” contractors will be treated as small and
d) All classified ”Petty Class” contractors will be treated as micro.

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 95
ANNEXURE II DEPRECIATION SCHEDULE
Bloc Sl.No Asset type Maximum Rates
I INFRASTRUCTURAL FACILTIES
1
Building – Permanent – all types
3%
2 Bridges – Permanent
3 Compound walls and Fencing
4 Roads – Permanent
5 Tube Wells and Deep wells and Water Pipe lines
1 Semi Permanent 20%
2 Temporary 50-100%
II ELECTRICITY GENERATION AND TRANSMISSION
1
Devices for controlling transmission loss
5%
2 Generator (Hydro)
3 Power House Equipments
4 Poles & Pillars
5 Sub Station Equipment
6 Transmission Lines – HT & LT
7 Underground Cables
III EQUIPMENT

1 Audio/Visual Equipments
15%
2 Computer/Data Processing System
3 Deep Freezers/Refrigerators (hotels &General Use)
4 Fire Fighting Equipments/System
5 Lighting Arresters
6 Laboratory Equipments
7 LPG Cylinders
8 Office Equipments – all types
9 Photographic/Reprographic Equipments
10 Pollution Control Equipments
11 Telephone including PABX system
12 Tools and Implements
13 Trekking Equipments
14 Vacuum Cleaner
15 Water Cooler and Water Purifier
16 Weighing Machines
17 Washing Machines
IV FURNITURE, FIXTURES & UTENSILS
1
Ceramic and Glass Utensils
15%
2 Carpets of all types
3 Curtains & Heavy Drapes
4 Domestic Electrical Appliances and Fixtures
5 Furniture of all Kinds
6 Mattresses. Pillows and Blankets
7 Silver, Steel, and Metallic Cookeries
V PLANT & MACHINERY ( Including spare parts and accessories)
1
Boilers

15%
2 Cinema Projectors and Screen
3 Cranes, Chain and Pulley

Page 96 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
4 Deep Freezers & Refrigerators (Industrial Purposes)

5 Earth Moving Machinery including Bulldozers,
6 Scrapers, Excavators, Wheel Loaders, etc
7 Fork Lifts
8 Industrial Gas Cylinders
9 Lifts
10 Mining Equipments and Machineries
11 Petrol Pump Installation and Tanks
12 Printing Machineries
13 Rope Way Installation
14 Road Rollers
15 Railing & Locomotives’ Storage Tanks
16 Wood Cutting / Processing Machines
VI VEHICLES, VESSELS & AIRCRAFTS
1
Aircraft including Helicopter
15%
2 Buses & Vans
3 Cycles & Rickshaws
4 Light Motor Vehicles including two or three Wheelers
5 Trucks & Trailers
6 Vessels – Ships, Boats, Rafts, etc
VII Small assets costing up to Nu. 25000 in total per taxpayer per
income year Write off

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 97
ANNEXURE III TDS SCHEDULE FOR MONTHLY SALARY INCOME

Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction From To From To From To From To
0 8,333 0 12,901 13,000 280 17,601 17,700 562 22,201 22,300 882
8,334 8,400 4 13,001 13,100 286 17,701 17,800 568 22,301 22,400 891
8,401 8,500 10 13101 13200 292 17,801 17,900 574 22,401 22,500 900
8,501 8,600 16 13201 13300 298 17,901 18,000 580 22,501 22,600 909
8,601 8,700 22 13301 13400 304 18,001 18,100 586 22,601 22,700 918
8,701 8,800 28 13401 13500 310 18,101 18,200 592 22,701 22,800 927
8,801 8,900 34 13,501 13,600 316 18,201 18,300 598 22,801 22,900 936
8,901 9,000 40 13,601 13,700 322 18,301 18,400 604 22,901 23,000 945
9,001 9,100 46 13,701 13,800 328 18,401 18,500 610 23,001 23,100 954
9,101 9,200 52 13,801 13,900 334 18,501 18,600 616 23,101 23,200 963
9,201 9,300 58 13,901 14,000 340 18,601 18,700 622 23,201 23,300 972
9,301 9,400 64 14,001 14,100 346 18,701 18,800 628 23,301 23,400 981
9,401 9,500 70 14,101 14,200 352 18,801 18,900 634 23,401 23,500 990
9,501 9,600 76 14,201 14,300 358 18,901 19,000 640 23,501 23,600 999
9,601 9,700 82 14,301 14,400 364 19,001 19,100 646 23,601 23,700 1,008
9,701 9,800 88 14,401 14,500 370 19,101 19,200 652 23,701 23,800 1,017
9,801 9,900 94 14,501 14,600 376 19,201 19,300 658 23,801 23,900 1,026
9,901 10,000 100 14,601 14,700 382 19,301 19,400 664 23,901 24,000 1,035
10,001 10,100 106 14,701 14,800 388 19,401 19,500 670 24,001 24,100 1,044
10,101 10,200 112 14,801 14,900 394 19,501 19,600 676 24,101 24,200 1,053
10,201 10,300 118 14,901 15,000 400 19,601 19,700 682 24,201 24,300 1,062
10,301 10,400 124 15,001 15,100 406 19,701 19,800 688 24,301 24,400 1,071
10,401 10,500 130 15,101 15,200 412 19,801 19,900 694 24,401 24,500 1,080
10,501 10,600 136 15,201 15,300 418 19,901 20,000 700 24,501 24,600 1,089
10,601 10,700 142 15,301 15,400 424 20,001 20,100 706 24,601 24,700 1,098
10,701 10,800 148 15,401 15,500 430 20,101 20,200 712 24,701 24,800 1,107
10,801 10,900 154 15,501 15,600 436 20,201 20,300 718 24,801 24,900 1,116
10,901 11,000 160 15,601 15,700 442 20,301 20,400 724 24,901 25,000 1,125
11,001 11,100 166 15,701 15,800 448 20,401 20,500 730 25,001 25,100 1,134
11,101 11,200 172 15,801 15,900 454 20,501 20,600 736 25,101 25,200 1,143
11,201 11,300 178 15,901 16,000 460 20,601 20,700 742 25,201 25,300 1,152
11,301 11,400 184 16,001 16,100 466 20,701 20,800 748 25,301 25,400 1,161
11,401 11,500 190 16,101 16,200 472 20,801 20,833 750 25,401 25,500 1,170
11,501 11,600 196 16,201 16,300 478 20,834 20,900 756 25,501 25,600 1,179
11,601 11,700 202 16,301 16,400 484 20,901 21,000 765 25,601 25,700 1,188
11,701 11,800 208 16,401 16,500 490 21,001 21,100 774 25,701 25,800 1,197
11,801 11,900 214 16,501 16,600 496 21,101 21,200 783 25,801 25,900 1,206
11,901 12,000 220 16,601 16,700 502 21,201 21,300 792 25,901 26,000 1,215
12,001 12,100 226 16,701 16,800 508 21,301 21,400 801 26,001 26,100 1,224
12,101 12,200 232 16,801 16,900 514 21,401 21,500 810 26,101 26,200 1,233
12,201 12,300 238 16,901 17,000 520 21,501 21,600 819 26,201 26,300 1,242
12,301 12,400 244 17,001 17,100 526 21,601 21,700 828 26,301 26,400 1,251
12,401 12,500 250 17,101 17,200 532 21,701 21,800 837 26,401 26,500 1,260
12,501 12,600 256 17,201 17,300 538 21,801 21,900 846 26,501 26,600 1,269
12,601 12,700 262 17,301 17,400 544 21,901 22,000 855 26,601 26,700 1,278
12,701 12,800 268 17,401 17,500 550 22,001 22,100 864 26,701 26,800 1,287
12,801 12,900 274 17,501 17,600 556 22,101 22,200 873 26,801 26,900 1,296

Page 98 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001

Monthly Salary TDS Deduction 26,901 27,000 1,305 27,001 27,100 1,314 27,101 27,200 1,323 27,201 27,300 1,332 27,301 27,400 1,341 27,401 27,500 1,350 27,501 27,600 1,359 27,601 27,700 1,368 27,701 27,800 1,377 27,801 27,900 1,386 27,901 28,000 1,395 28,001 28,100 1,404 28,101 28,200 1,413 28,201 28,300 1,422 28,301 28,400 1,431 28,401 28,500 1,440 28,501 28,600 1,449 28,601 28,700 1,458 28,701 28,800 1,467 28,801 28,900 1,476 28,901 29,000 1,485 29,001 29,100 1,494 29,101 29,200 1,503 29,201 29,300 1,512 29,301 29,400 1,521 29,401 29,500 1,530 29,501 29,600 1,539 29,601 29,700 1,548 29,701 29,800 1,557 29,801 29,900 1,566 29,901 30,000 1,575 30,001 30,100 1,584 30,101 30,200 1,593 30,201 30,300 1,602 30,301 30,400 1,611 30,401 30,500 1,620 30,501 30,600 1,629 30,601 30,700 1,638 30,701 30,800 1,647 30,801 30,900 1,656 30,901 31,000 1,665 31,001 31,100 1,674 31,101 31,200 1,683 31,201 31,300 1,692 31,301 31,400 1,701 31,401 31,500 1,710 31,501 31,600 1,719 31,601 31,700 1,728 Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction From To From To From To From To
31,701 31,800 1,737 36,501 36,600 2,169 41,301 41,400 2,601
31,801 31,900 1,746 36,601 36,700 2,178 41,401 41,500 2,610
31,901 32,000 1,755 36,701 36,800 2,187 41,501 41,600 2,619
32,001 32,100 1,764 36,801 36,900 2,196 41,601 41,666 2,625
32,101 32,200 1,773 36,901 37,000 2,205 41,667 41,700 2,629
32,201 32,300 1,782 37,001 37,100 2,214 41,701 41,800 2,641
32,301 32,400 1,791 37,101 37,200 2,223 41,801 41,900 2,653
32,401 32,500 1,800 37,201 37,300 2,232 41,901 42,000 2,665
32,501 32,600 1,809 37,301 37,400 2,241 42,001 42,100 2,677
32,601 32,700 1,818 37,401 37,500 2,250 42,101 42,200 2,689
32,701 32,800 1,827 37,501 37,600 2,259 42,201 42,300 2,701
32,801 32,900 1,836 37,601 37,700 2,268 42,301 42,400 2,713
32,901 33,000 1,845 37,701 37,800 2,277 42,401 42,500 2,725
33,001 33,100 1,854 37,801 37,900 2,286 42,501 42,600 2,737
33,101 33,200 1,863 37,901 38,000 2,295 42,601 42,700 2,749
33,201 33,300 1,872 38,001 38,100 2,304 42,701 42,800 2,761
33,301 33,400 1,881 38,101 38,200 2,313 42,801 42,900 2,773
33,401 33,500 1,890 38,201 38,300 2,322 42,901 43,000 2,785
33,501 33,600 1,899 38,301 38,400 2,331 43,001 43,100 2,797
33,601 33,700 1,908 38,401 38,500 2,340 43,101 43,200 2,809
33,701 33,800 1,917 38,501 38,600 2,349 43,201 43,300 2,821
33,801 33,900 1,926 38,601 38,700 2,358 43,301 43,400 2,833
33,901 34,000 1,935 38,701 38,800 2,367 43,401 43,500 2,845
34,001 34,100 1,944 38,801 38,900 2,376 43,501 43,600 2,857
34,101 34,200 1,953 38,901 39,000 2,385 43,601 43,700 2,869
34,201 34,300 1,962 39,001 39,100 2,394 43,701 43,800 2,881
34,301 34,400 1,971 39,101 39,200 2,403 43,801 43,900 2,893
34,401 34,500 1,980 39,201 39,300 2,412 43,901 44,000 2,905
34,501 34,600 1,989 39,301 39,400 2,421 44,001 44,100 2,917
34,601 34,700 1,998 39,401 39,500 2,430 44,101 44,200 2,929
34,701 34,800 2,007 39,501 39,600 2,439 44,201 44,300 2,941
34,801 34,900 2,016 39,601 39,700 2,448 44,301 44,400 2,953
34,901 35,000 2,025 39,701 39,800 2,457 44,401 44,500 2,965
35,001 35,100 2,034 39,801 39,900 2,466 44,501 44,600 2,977
35,101 35,200 2,043 39,901 40,000 2,475 44,601 44,700 2,989
35,201 35,300 2,052 40,001 40,100 2,484 44,701 44,800 3,001
35,301 35,400 2,061 40,101 40,200 2,493 44,801 44,900 3,013
35,401 35,500 2,070 40,201 40,300 2,502 44,901 45,000 3,025
35,501 35,600 2,079 40,301 40,400 2,511 45,001 45,100 3,037
35,601 35,700 2,088 40,401 40,500 2,520 45,101 45,200 3,049
35,701 35,800 2,097 40,501 40,600 2,529 45,201 45,300 3,061
35,801 35,900 2,106 40,601 40,700 2,538 45,301 45,400 3,073
35,901 36,000 2,115 40,701 40,800 2,547 45,401 45,500 3,085
36,001 36,100 2,124 40,801 40,900 2,556 45,501 45,600 3,097
36,101 36,200 2,133 40,901 41,000 2,565 45,601 45,700 3,109
36,201 36,300 2,142 41,001 41,100 2,574 45,701 45,800 3,121
36,301 36,400 2,151 41,101 41,200 2,583 45,801 45,900 3,133
36,401 36,500 2,160 41,201 41,300 2,592 45,901 46,000 3,145

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 99

Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction From To From To From To From To
46,001 46,100 3,157 50,801 50,900 3,733 55,601 55,700 4,309 60,401 60,500 4,885
46,101 46,200 3,169 50,901 51,000 3,745 55,701 55,800 4,321 60,501 60,600 4,897
46,201 46,300 3,181 51,001 51,100 3,757 55,801 55,900 4,333 60,601 60,700 4,909
46,301 46,400 3,193 51,101 51,200 3,769 55,901 56,000 4,345 60,701 60,800 4,921
46,401 46,500 3,205 51,201 51,300 3,781 56,001 56,100 4,357 60,801 60,900 4,933
46,501 46,600 3,217 51,301 51,400 3,793 56,101 56,200 4,369 60,901 61,000 4,945
46,601 46,700 3,229 51,401 51,500 3,805 56,201 56,300 4,381 61,001 61,100 4,957
46,701 46,800 3,241 51,501 51,600 3,817 56,301 56,400 4,393 61,101 61,200 4,969
46,801 46,900 3,253 51,601 51,700 3,829 56,401 56,500 4,405 61,201 61,300 4,981
46,901 47,000 3,265 51,701 51,800 3,841 56,501 56,600 4,417 61,301 61,400 4,993
47,001 47,100 3,277 51,801 51,900 3,853 56,601 56,700 4,429 61,401 61,500 5,005
47,101 47,200 3,289 51,901 52,000 3,865 56,701 56,800 4,441 61,501 61,600 5,017
47,201 47,300 3,301 52,001 52,100 3,877 56,801 56,900 4,453 61,601 61,700 5,029
47,301 47,400 3,313 52,101 52,200 3,889 56,901 57,000 4,465 61,701 61,800 5,041
47,401 47,500 3,325 52,201 52,300 3,901 57,001 57,100 4,477 61,801 61,900 5,053
47,501 47,600 3,337 52,301 52,400 3,913 57,101 57,200 4,489 61,901 62,000 5,065
47,601 47,700 3,349 52,401 52,500 3,925 57,201 57,300 4,501 62,001 62,100 5,077
47,701 47,800 3,361 52,501 52,600 3,937 57,301 57,400 4,513 62,101 62,200 5,089
47,801 47,900 3,373 52,601 52,700 3,949 57,401 57,500 4,525 62,201 62,300 5,101
47,901 48,000 3,385 52,701 52,800 3,961 57,501 57,600 4,537 62,301 62,400 5,113
48,001 48,100 3,397 52,801 52,900 3,973 57,601 57,700 4,549 62,401 62,500 5,125
48,101 48,200 3,409 52,901 53,000 3,985 57,701 57,800 4,561 62,501 62,600 5,137
48,201 48,300 3,421 53,001 53,100 3,997 57,801 57,900 4,573 62,601 62,700 5,149
48,301 48,400 3,433 53,101 53,200 4,009 57,901 58,000 4,585 62,701 62,800 5,161
48,401 48,500 3,445 53,201 53,300 4,021 58,001 58,100 4,597 62,801 62,900 5,173
48,501 48,600 3,457 53,301 53,400 4,033 58,101 58,200 4,609 62,901 63,000 5,185
48,601 48,700 3,469 53,401 53,500 4,045 58,201 58,300 4,621 63,001 63,100 5,197
48,701 48,800 3,481 53,501 53,600 4,057 58,301 58,400 4,633 63,101 63,200 5,209
48,801 48,900 3,493 53,601 53,700 4,069 58,401 58,500 4,645 63,201 63,300 5,221
48,901 49,000 3,505 53,701 53,800 4,081 58,501 58,600 4,657 63,301 63,400 5,233
49,001 49,100 3,517 53,801 53,900 4,093 58,601 58,700 4,669 63,401 63,500 5,245
49,101 49,200 3,529 53,901 54,000 4,105 58,701 58,800 4,681 63,501 63,600 5,257
49,201 49,300 3,541 54,001 54,100 4,117 58,801 58,900 4,693 63,601 63,700 5,269
49,301 49,400 3,553 54,101 54,200 4,129 58,901 59,000 4,705 63,701 63,800 5,281
49,401 49,500 3,565 54,201 54,300 4,141 59,001 59,100 4,717 63,801 63,900 5,293
49,501 49,600 3,577 54,301 54,400 4,153 59,101 59,200 4,729 63,901 64,000 5,305
49,601 49,700 3,589 54,401 54,500 4,165 59,201 59,300 4,741 64,001 64,100 5,317
49,701 49,800 3,601 54,501 54,600 4,177 59,301 59,400 4,753 64,101 64,200 5,329
49,801 49,900 3,613 54,601 54,700 4,189 59,401 59,500 4,765 64,201 64,300 5,341
49,901 50,000 3,625 54,701 54,800 4,201 59,501 59,600 4,777 64,301 64,400 5,353
50,001 50,100 3,637 54,801 54,900 4,213 59,601 59,700 4,789 64,401 64,500 5,365
50,101 50,200 3,649 54,901 55,000 4,225 59,701 59,800 4,801 64,501 64,600 5,377
50,201 50,300 3,661 55,001 55,100 4,237 59,801 59,900 4,813 64,601 64,700 5,389
50,301 50,400 3,673 55,101 55,200 4,249 59,901 60,000 4,825 64,701 64,800 5,401
50,401 50,500 3,685 55,201 55,300 4,261 60,001 60,100 4,837 64,801 64,900 5,413
50,501 50,600 3,697 55,301 55,400 4,273 60,101 60,200 4,849 64,901 65,000 5,425
50,601 50,700 3,709 55,401 55,500 4,285 60,201 60,300 4,861 65,001 65,100 5,437
50,701 50,800 3,721 55,501 55,600 4,297 60,301 60,400 4,873 65,101 65,200 5,449

Page 100 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction From To From To From To From To
65,201 65,300 5,461 70,101 70,200 6,049 75,001 75,100 6,637 79,901 80,000 7,225
65,301 65,400 5,473 70,201 70,300 6,061 75,101 75,200 6,649 80,001 80,100 7,237
65,401 65,500 5,485 70,301 70,400 6,073 75,201 75,300 6,661 80,101 80,200 7,249
65,501 65,600 5,497 70,401 70,500 6,085 75,301 75,400 6,673 80,201 80,300 7,261
65,601 65,700 5,509 70,501 70,600 6,097 75,401 75,500 6,685 80,301 80,400 7,273
65,701 65,800 5,521 70,601 70,700 6,109 75,501 75,600 6,697 80,401 80,500 7,285
65,801 65,900 5,533 70,701 70,800 6,121 75,601 75,700 6,709 80,501 80,600 7,297
65,901 66,000 5,545 70,801 70,900 6,133 75,701 75,800 6,721 80,601 80,700 7,309
66,001 66,100 5,557 70,901 71,000 6,145 75,801 75,900 6,733 80,701 80,800 7,321
66,101 66,200 5,569 71,001 71,100 6,157 75,901 76,000 6,745 80,801 80,900 7,333
66,201 66,300 5,581 71,101 71,200 6,169 76,001 76,100 6,757 80,901 81,000 7,345
66,301 66,400 5,593 71,201 71,300 6,181 76,101 76,200 6,769 81,001 81,100 7,357
66,401 66,500 5,605 71,301 71,400 6,193 76,201 76,300 6,781 81,101 81,200 7,369
66,501 66,600 5,617 71,401 71,500 6,205 76,301 76,400 6,793 81,201 81,300 7,381
66,601 66,700 5,629 71,501 71,600 6,217 76,401 76,500 6,805 81,301 81,400 7,393
66,701 66,800 5,641 71,601 71,700 6,229 76,501 76,600 6,817 81,400 81,500 7,405
66,801 66,900 5,653 71,701 71,800 6,241 76,601 76,700 6,829 81,501 81,600 7,417
66,901 67,000 5,665 71,801 71,900 6,253 76,701 76,800 6,841 81,601 81,700 7,429
67,001 67,100 5,677 71,901 72,000 6,265 76,801 76,900 6,853 81,701 81,800 7,441
67,101 67,200 5,689 72,001 72,100 6,277 76,901 77,000 6,865 81,801 81,900 7,453
67,201 67,300 5,701 72,101 72,200 6,289 77,001 77,100 6,877 81,901 82,000 7,465
67,301 67,400 5,713 72,201 72,300 6,301 77,101 77,200 6,889 82,001 82,100 7,477
67,401 67,500 5,725 72,301 72,400 6,313 77,201 77,300 6,901 82,101 82,200 7,489
67,501 67,600 5,737 72,401 72,500 6,325 77,301 77,400 6,913 82,201 82,300 7,501
67,601 67,700 5,749 72,501 72,600 6,337 77,401 77,500 6,925 82,301 82,400 7,513
67,701 67,800 5,761 72,601 72,700 6,349 77,501 77,600 6,937 82,401 82,500 7,525
67,801 67,900 5,773 72,701 72,800 6,361 77,601 77,700 6,949 82,501 82,600 7,537
67,901 68,000 5,785 72,801 72,900 6,373 77,701 77,800 6,961 82,601 82,700 7,549
68,001 68,100 5,797 72,901 73,000 6,385 77,801 77,900 6,973 82,701 82,800 7,561
68,101 68,200 5,809 73,001 73,100 6,397 77,901 78,000 6,985 82,801 82,900 7,573
68,201 68,300 5,821 73,101 73,200 6,409 78,001 78,100 6,997 82,901 83,000 7,585
68,301 68,400 5,833 73,201 73,300 6,421 78,101 78,200 7,009 83,001 83,100 7,597
68,401 68,500 5,845 73,301 73,400 6,433 78,201 78,300 7,021 83,101 83,200 7,609
68,501 68,600 5,857 73,401 73,500 6,445 78,301 78,400 7,033 83,201 83,300 7,621
68,601 68,700 5,869 73,501 73,600 6,457 78,401 78,500 7,045 83,301 83,333 7,625
68,701 68,800 5,881 73,601 73,700 6,469 78,501 78,600 7,057 83,334 83,400 7,635
68,801 68,900 5,893 73,701 73,800 6,481 78,601 78,700 7,069 83,401 83,500 7,650
68,901 69,000 5,905 73,801 73,900 6,493 78,701 78,800 7,081 83,501 83,600 7,665
69,001 69,100 5,917 73,901 74,000 6,505 78,801 78,900 7,093 83,601 83,700 7,680
69,101 69,200 5,929 74,001 74,100 6,517 78,901 79,000 7,105 83,701 83,800 7,695
69,201 69,300 5,941 74,101 74,200 6,529 79,001 79,100 7,117 83,801 83,900 7,710
69,301 69,400 5,953 74,201 74,300 6,541 79,101 79,200 7,129 83,901 84,000 7,725
69,401 69,500 5,965 74,301 74,400 6,553 79,201 79,300 7,141 84,001 84,100 7,740
69,501 69,600 5,977 74,401 74,500 6,565 79,301 79,400 7,153 84,101 84,200 7,755
69,601 69,700 5,989 74,501 74,600 6,577 79,401 79,500 7,165 84,201 84,300 7,770
69,701 69,800 6,001 74,601 74,700 6,589 79,501 79,600 7,177 84,301 84,400 7,785
69,801 69,900 6,013 74,701 74,800 6,601 79,601 79,700 7,189 84,401 84,500 7,800
69,901 70,000 6,025 74,801 74,900 6,613 79,701 79,800 7,201 84,501 84,600 7,815
70,001 70,100 6,037 74,901 75,000 6,625 79,801 79,900 7,213 84,601 84,700 7,830

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 101

Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction Monthly Salary TDS Deduction From To From To From To From To
84,701 84,800 7,845 89,501 89,600 8,565 94,301 94,400 9,285 99,101 99,200 10,005
84,801 84,900 7,860 89,601 89,700 8,580 94,401 94,500 9,300 99,201 99,300 10,020
84,901 85,000 7,875 89,701 89,800 8,595 94,501 94,600 9,315 99,301 99,400 10,035
85,001 85,100 7,890 89,801 89,900 8,610 94,601 94,700 9,330 99,401 99,500 10,050
85,101 85,200 7,905 89,901 90,000 8,625 94,701 94,800 9,345 99,501 99,600 10,065
85,201 85,300 7,920 90,001 90,100 8,640 94,801 94,900 9360 99,601 99,700 10,080
85,301 85,400 7,935 90,101 90,200 8,655 94,901 95,000 9,375 99,701 99,800 10,095
85,401 85,500 7,950 90,201 90,300 8,670 95,001 95,100 9,390 99,801 99,900 10,110
85,501 85,600 7,965 90,301 90,400 8,685 95,101 95,200 9,405 99,901 100,000 10,125
85,601 85,700 7,980 90,401 90,500 8,700 95,201 95,300 9,420 100,001 100,100 10,140
85,701 85,800 7,995 90,501 90,600 8,715 95,301 95,400 9,435 100,101 100,200 10,155
85,801 85,900 8,010 90,601 90,700 8,730 95,401 95,500 9,450 100,201 100,300 10,170
85,901 86,000 8,025 90,701 90,800 8,745 95,501 95,600 9,465 100,301 100,400 10,185
86,001 86,100 8,040 90,801 90,900 8,760 95,601 95,700 9,480 100,401 100,500 10,200
86,101 86,200 8,055 90,901 91,000 8,775 95,701 95,800 9,495 100,501 100,600 10,215
86,201 86,300 8,070 91,001 91,100 8,790 95,801 95,900 9,510 100,601 100,700 10,230
86,301 86,400 8,085 91,101 91,200 8,805 95,901 96,000 9,525 100,701 100,800 10,245
86,401 86,500 8,100 91,201 91,300 8,820 96,001 96,100 9,540 100,801 100,900 10,260
86,501 86,600 8,115 91,301 91,400 8,835 96,101 96,200 9,555 100,901 101,000 10,275
86,601 86,700 8,130 91,401 91,500 8,850 96,201 96,300 9,570 101,001 101,100 10,290
86,701 86,800 8,145 91,501 91,600 8,865 96,301 96,400 9,585 101,101 101,200 10,305
86,801 86,900 8,160 91,601 91,700 8,880 96,401 96,500 9,600 101,201 101,300 10,320
86,901 87,000 8,175 91,701 91,800 8,895 96,501 96,600 9,615 101,301 101,400 10,335
87,001 87,100 8,190 91,801 91,900 8,910 96,601 96,700 9,630 101,401 101,500 10,350
87,101 87,200 8,205 91,901 92,000 8,925 96,701 96,800 9,645 101,501 101,600 10,365
87,201 87,300 8,220 92,001 92,100 8,940 96,801 96,900 9,660 101,601 101,700 10,380
87,301 87,400 8,235 92,101 92,200 8,955 96,901 97,000 9,675 101,701 101,800 10,395
87,401 87,500 8,250 92,201 92,300 8,970 97,001 97,100 9,690 101,801 101,900 10,410
87,501 87,600 8,265 92,301 92,400 8,985 97,101 97,200 9,705 101,901 102,000 10,425
87,601 87,700 8,280 92,401 92,500 9,000 97,201 97,300 9,720 102,001 102,100 10,440
87,701 87,800 8,295 92,501 92,600 9,015 97,301 97,400 9,735 102,101 102,200 10,455
87,801 87,900 8,310 92,601 92,700 9,030 97,401 97,500 9,750 102,201 102,300 10,470
87,901 88,000 8,325 92,701 92,800 9,045 97,501 97,600 9,765 102,301 102,400 10,485
88,001 88,100 8,340 92,801 92,900 9,060 97,601 97,700 9,780 102,401 102,500 10,500
88,101 88,200 8,355 92,901 93,000 9,075 97,701 97,800 9,795 102,501 102,600 10,515
88,201 88,300 8,370 93,001 93,100 9,090 97,801 97,900 9,810 102,601 102,700 10,530
88,301 88,400 8,385 93,101 93,200 9,105 97,901 98,000 9,825 102,701 102,800 10,545
88,401 88,500 8,400 93,201 93,300 9,120 98,001 98,100 9,840 102,801 102,900 10,560
88,501 88,600 8,415 93,301 93,400 9,135 98,101 98,200 9,855 102,901 103,000 10,575
88,601 88,700 8,430 93,401 93,500 9,150 98,201 98,300 9,870 103,001 103,100 10,590
88,701 88,800 8,445 93,501 93,600 9,165 98,301 98,400 9,885 103,101 103,200 10,605
88,801 88,900 8,460 93,601 93,700 9,180 98,401 98,500 9,900 103,201 103,300 10,620
88,901 89,000 8,475 93,701 93,800 9,195 98,501 98,600 9,915 103,301 103,400 10,635
89,001 89,100 8,490 93,801 93,900 9,210 98,601 98,700 9,930 103,401 103,500 10,650
89,101 89,200 8,505 93,901 94,000 9,225 98,701 98,800 9,945 103,501 103,600 10,665
89,201 89,300 8,520 94,001 94,100 9240 98,801 98,900 9,960 103,601 103,700 10,680
89,301 89,400 8,535 94,101 94,200 9,255 98,901 99,000 9,975 103,701 103,800 10,695
89,401 89,500 8,550 94,201 94,300 9,270 99,001 99,100 9,990 103,801 103,900 10,710

Page 102 Rules on the Income Tax Act of the Kingdom of Bhutan, 2001
Monthly Salary TDS Deduction
Monthly Salary TDS Deduction
Monthly Salary TDS Deduction
From To From To From To
103,901 104,000 10,725 108,701 108,800 11,445 113,501 113,600 12,165
104,001 104,100 10,740 108,801 108,900 11,460 113,601 113,700 12,180
104,101 104,200 10,755 108,901 109,000 11,475 113,701 113,800 12,195
104,201 104,300 10,770 109,001 109,100 11,490 113,801 113,900 12,210
104,301 104,400 10,785 109,101 109,200 11,505
104,401 104,500 10,800 109,201 109,300 11,520
104,501 104,600 10,815 109,301 109,400 11,535
104,601 104,700 10,830 109,401 109,500 11,550
104,701 104,800 10,845 109,501 109,600 11,565
104,801 104,900 10,860 109,601 109,700 11,580
104,901 105,000 10,875 109,701 109,800 11,595
105,001 105,100 10,890 109,801 109,900 11,610
105,101 105,200 10,905 109,901 110,000 11,625
105,201 105,300 10,920 110,001 110,100 11,640
105,301 105,400 10,935 110,101 110,200 11,655
105,401 105,500 10,950 110,201 110,300 11,670
105,501 105,600 10,965 110,301 110,400 11,685
105,601 105,700 10,980 110,401 110,500 11,700
105,701 105,800 10,995 110,501 110,600 11,715
105,801 105,900 11,010 110,601 110,700 11,730
105,901 106,000 11,025 110,701 110,800 11,745
106,001 106,100 11,040 110,801 110,900 11,760
106,101 106,200 11,055 110,901 111,000 11,775
106,201 106,300 11,070 111,001 111,100 11,790
106,301 106,400 11,085 111,101 111,200 11,805
106,401 106,500 11,100 111,201 111,300 11,820
106,501 106,600 11,115 111,301 111,400 11,835
106,601 106,700 11,130 111,401 111,500 11,850
106,701 106,800 11,145 111,501 111,600 11,865
106,801 106,900 11,160 111,601 111,700 11,880
106,901 107,000 11,175 111,701 111,800 11,895
107,001 107,100 11,190 111,801 111,900 11,910
107,101 107,200 11,205 111,901 112,000 11,925
107,201 107,300 11,220 112,001 112,100 11,940
107,301 107,400 11,235 112,101 112,200 11,955
107,401 107,500 11,250 112,201 112,300 11,970
107,501 107,600 11,265 112,301 112,400 11,985
107,601 107,700 11,280 112,401 112,500 12,000
107,701 107,800 11,295 112,501 112,600 12,015
107,801 107,900 11,310 112,601 112,700 12,030
107,901 108,000 11,325 112,701 112,800 12,045
108,001 108,100 11,340 112,801 112,900 12,060
108,101 108,200 11,355 112,901 113,000 12,075
108,201 108,300 11,370 113,001 113,100 12,090
108,301 108,400 11,385 113,101 113,200 12,105
108,401 108,500 11,400 113,201 113,300 12,120
108,501 108,600 11,415 113,301 113,400 12,135
108,601 108,700 11,430 113,401 113,500 12,150

Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 Page 103
Instructions
a) All employers must deduct TDS as per rates given in the Schedule at the time of disbustment and
deposit the same to the nearest RRCO or into a RGR account on or before the 10th of the following
month.

b) Where an employer is not under any legal obligation to deduct TDS from its employees, the individual
that is, the employee shall be responsible for paying the tax as per rates prescribed in the schedule to
the concerned RRCO on a quarterly basis.

c) Failure to deduct/deposit TDS shall result in fines and penalties as per Chapter 5 of the General
Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.

d) For more details see Rule No. 3.2.2(a) of the General Provisions.

ICNL

ICNL

Income Tax Act

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