Assembly approves annual budget and tax reform bill

NA: The National Assembly yesterday passed the Revised Taxes and Levies Bill of Bhutan, 2016. One of the noteworthy features of the bill is the raising of the minimum Personal Income Tax (PIT) exemption limit from Nu 100,000 to Nu 200,000.

This will exempt some 31,692 people, whose incomes exceed the exemption limit under the existing PIT slab, from paying PIT. Under the existing slab, 14,413 people enjoy the exemption.

Finance minister Namgay Dorji, who moved the motion in the Assembly for adoption of the bill, expressed hope that the bill will benefit both individuals and the private sector as a whole. “The reform will immensely benefit low-income people, children and the private sector,” he said.

Out of the 43 members present during the vote, 38 voted in favour of the bill. Two members voted against the bill, while three abstained.

The bill will be sent to the National Council for deliberation. However, the Council’s suggestions and alterations would not be binding since it was passed as a money bill.

The PIT reform is estimated to cost Nu 484 million (M) in the form of revenue for the national exchequer as the number of taxpayers falling into the tax bracket will be reduced. However, the amendment would benefit Bhutan’s middle class income group, which has been hit the hardest by rising inflation.

The bill also raises the basic exemption limit on education expenses from Nu 50,000 to Nu 150,000 per child per annum.

Royalty and mineral rent have also been revised, but that will apply only for exports. The revised rate for mineral rent is 10 percent of the projected export royalty or domestic royalty whichever is higher.

Some members raised concerns on the revision of mineral rent saying that the raise would have a negative impact on the manufacturing industry. However, it was clarified that the proposed revision of royalty and mineral rent came after several rounds of recommendations by the Royal Audit Authority and the Anti-Corruption Commission.

The house also waived off tax on import of foreign published textbooks, journals, periodicals and teaching aid materials. This is aimed at encouraging reading habits and make books affordable to all.

Currently, books imported from countries other than India are levied with a 20 percent customs duty and five percent sales tax. Only sales tax was applicable for books imported from India.

The assembly agreed on the revision to exempt tax on import of medical supplies and equipment not meant for commercial purposes. These include laboratory and diagnostic reagents, on which a customs duty of 10 percent applies currently.

Meanwhile, the Assembly also endorsed the Supplementary Budget Appropriation Bill for the Financial Year 2015-16 to the tune of Nu 3.403 billion (B) and the Annual Budget for the Financial Year 2016-17 which amounts to Nu 54.828B.

Out of the 42 members present during the vote, 41 voted in favour of the budget while Panbang Member MP Dorji Wangdi voted against the bill. He said the dzongkhag-wise budget allocation was not in keeping with the provisions of Article 9, Section 8 of the Constitution and that Zhemgang received the lowest amount of budget.

MB Subba

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