Is the re­vi­sion timely?

Bhutan Times - - Editorial -

As per the In­come Tax Act of the King­dom of Bhutan 2001, all Bhutanese in­di­vid­u­als hav­ing an an­nu­ally in­come of ex­ceed­ing Nu.100, 000 are li­able for Per­sonal In­come Tax (PIT).

Those earn­ing an in­come be­tween Nu.100, 001-250, 000 are charged with 10 per­cent tax and the slab keeps in­creas­ing as the in­come amount in­creases.

Fi­nance Min­is­ter said that the present tax slab was agreed upon in 2001 and that it has been al­most 14 years since it was last re­vised.

He said given the eco­nomic con­di­tion and in­ter­na­tional rules and reg­u­la­tion, it is time to look into it and the tax slabs in our neigh­bor­ing coun­try of In­dia gets re­vised every fi­nan­cial year .

The min­is­ter also pro­posed to ex­empt taxes on im­port of ma­chin­ery for man­u­fac­tur­ing medic­i­nal herbs and books. The de­ci­sion will be made af­ter a thor­ough dis­cus­sion by the com­mit­tee in com­ing weeks.

The ba­sic ex­emp­tion limit of the Per­sonal In­come Tax (PIT) is be­ing pro­posed to be re­vised from Nu 100,000 to Nu 200, 000, as pledged by the gov­ern­ment dur­ing the elec­tion pe­riod 2013.

The ed­u­ca­tion ex­pense lim­ited for the PIT is also pro­posed to be re­vised from Nu.50, 000 to Nu.150, 000 a child per an­num. The ex­ist­ing al­low­able de­duc­tion for ed­u­ca­tion ex­pense is Nu.50, 000 or the ac­tual cost, which­ever is lower. As the Par­lia­ment ap­prove the pro­posal, the same clause would ap­ply on the Nu.150, 000 al­low­able de­duc­tions.

In most coun­tries, the ba­sic ex­emp­tion limit is re­vised an­nu­ally, ad­just­ing for an­nual in­fla­tion.

How­ever, if the next tax­able in­come ex­ceeds Nu.200, 000 but does not ex­ceed Nu. 250,000, a tax of 10 per­cent is levied on the amount by which the net tax­able in­come ex­ceeds Nu.200, 000.

Sim­i­larly, for the net tax­able in­come be­tween Nu.250, 000 and Nu.500, 000, the tax rate would be Nu.5, 000 plus 15 per­cent of the amount by which tax­able in­come ex­ceeds Nu.250, 000. For net tax­able, in­come be­tween Nu.50, 000 and Nu.1m, a tax of Nu.42, 500 plus 20 per­cent rate would be levied. For in­come ex­ceed­ing Nu.1m, the pro­posed tax is Nu.142, 200 plus 25 per­cent in a sim­i­lar man­ner.

How­ever, with the tax slab, the gov­ern­ment will cost Nu.484m an­nu­ally and a to­tal of 31,692 peo­ple who are earn­ing more than Nu.100, 000 but less than earn­ing Nu.200, 000 will be­come PIT tax free.

As com­mit­ted by the gov­ern­ment the re­vi­sion of the per­sonal in­come tax seems to pro­vide a re­lief to nearly 32.000 tax pay­ers hard earned in­come and will shorten the gap be­tween the have and have-nots in our so­ci­ety. As such the re­vi­sion is timely and most ap­pro­pri­ate as the gov­ern­ment has about two years to go for polls in 2018.

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