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Who is liable for CIT & BIT?
Corporate Income
Tax (CIT)
All companies incorporated under the Companies Act 19889 and registered with
the Ministry of Trade and Industry.
Business Income
Tax (BIT)
All business units holding a Trade License issued by the Ministry of Trade
& Industry.
What are the
Tax Rates?
CIT/BIT is levied
at a rate of 30% on the Net Profit of the company or business units in each
calendar year.
When to submit
tax returns?
All companies and
businesses must submit their tax return, between 1st January and 31st March
following the tax year.
Where to
submit?
To the concerned
Regional Revenue & Customs office where the Taxpayer is registered.
What to submit?
The following
documents must be submitted:
- Annual Corporate/Business Income
Tax Return (Form IT-10)
- Annual Accounts (Form IT-7)
- Details of taxes paid/deducted at source ( if applicable)
Is there an
extension of time limit?
YES. When a
taxpayer is unable to submit the Tax Return within the scheduled time due to
unavoidable circumstances, the taxpayer must make a provisional tax payment
based on the previous year's final tax liability along with a written
application requesting an extension of time. These must be submitted before
20th March to the concerned regional Director. The RRCO can extended the time
limit till 31st May. Request for further extension should be referred to DRC,
HQ.
How
do I pay my tax?
Taxes
must be paid when you submit your tax
returns. However, all notified large and
medium CIT and BIT units must pay tax on
half-yearly basis as Advance Tax by
31st August of the Tax year.
The Advance Tax should be based on a
half-yearly Profit & Loss Account or
50% of the CIT/BIT paid in the previous
year. The Advance Tax paid by a
unit during the tax year will
automatically be adjusted at the time of
filling the Annual Tax Returns.
What
conditions should be met to avail of the
allowable deductions for CIT/BIT?
The
following conditions must be met to avail
the allowable deductions as mentioned in
the Taxation Policy 1992:
- Proper books of account must be
maintained.
- The expense must be incurred exclusively
for the purpose of the business or
company, and must be supported by
objective evidence, such as purchase
invoices, money receipts or other legally
valid documents.
Deductions
not Allowed for Tax Purposes 
Private
Expenses are not allowable deductions for
tax purposes. Examples of each expenses
might include:
- Personal expenses
- Personal administration fees
- Payments of dividend, profit
distributions, or adjustments of reserves
- Life and health insurance premiums
- Income tax(CIT/BIT)
- Penalties, fines and penal interest
- Capital expenditure
- Renovation or alteration of
building/premises
What are the fines and penalties?
Fines
and penalties are normally levied when
taxpayers do not comply with the taxation
rules in force. They are levied on late
submission of returns, late payment of
taxes due, tax evasion and fraud etc.
Fine
rates:
(i)
For tax returns not submitted before 31st
March.
(ii) A penal interest of 24% per annum on
the tax amount assessed or a fine of Nu.
100 per day.
(iii) For late payment of taxes, a
penal interest of 24% per annum on the
outstanding amount due.
(iv) For tax evasion, a penalty
equal to twice the tax amount sought to be
evaded. In addition, interest at 24% per
annum, on both the additional tax amount
and the penalty, will apply from the 1st
April till the date of payment.
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TAX
DEDUCTED AT SOURCE/TDS

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What
is tax deducted at source (TDS)?
Tax
deducted at source is a method of tax
collection where taxes are deducted at the
time of payment by the disbursing
authority and deposited to the RGR account
on a current basis. It is not a separate
form of taxation and adjustments if
applicable are made against a taxpayer's
final tax liability.
Which
category of taxpayers fall under TDS and
who is responsible for deductions at
source?
The
following taxpayers are subject to TDS.
1.
Tour Operates: Tour operates approved
and registered with the Tourism Authority
of Bhutan (TAB).
The Tourism Authority of Bhutan is
responsible for ensuring that 2% of the
net income is withheld at source from all
tour operations after the deduction of 35%
royalty and, deposited in a RGR Account on
a current basis.
2.
National Licensed Contractors : National
Licensed Contractors holding a valid
Bhutanese License issued by the Ministry
of Trade & Industry.
TDS of National Licensed contractors
applies to construction and logging
activity. 2% Contractors TDS on all
disbursements shall be deducted at source
by the Contractor Awardees and deposited
with the RGR Account. The same will be
adjusted their final tax liability when
returns are filled.
However,
in the case of Petty Contractors, the 2%
contractor tax withheld shall be treated
as final tax.
3.
Non Licensed Foreign Contractors: Foreign
Contractors who are non licensed or
contractors holding a temporary Bhutanese
Trade License.
3% TDS on the bill amount shall be
deducted at source by the Contract Awardee
and deposited with the RGR account in lieu
of Business/Corporate Income Tax. The
amount deducted will be considered as the
final tax paid. They are not required to
submit final accounts or Income Tax
Returns.
4.
Individuals with salaried income: The
employer is responsible for deducting both
Salary Tax & Health Contribution from
the net salary of all employees and
depositing the amount in a RGR Account or
at the nearest regional Revenue &
Customs office on a monthly basis.
What
are the information/documents to be
submitted to the tax authorities by the
taxpayer?
Proper
accounting records as per Taxation Policy
1992 must be maintained and Income Tax
Returns filled in the prescribed Form
(IT-10)
Documents submitted must include the
following:
- Names of all contract awarders.
- Total income and the liable awarders.
- Total amount of advances received, and
the amount deducted on those advances.
- Any other receipts, and the amount
deducted on those receipts.
- Details of closing work in progress, and
the method of valuation used.
What
are the Information/documents to be
submitted to the tax authorities by the
contract awarders/TDS agencies?
All
contract awarders must carry out the
following:
- Submit copies of all contract agreements
to the concerned RRCO within a week of
signing the contract.
- Deduct the appropriate rate of taxes
from each payment to a contractor,
regardless of whether the payment is an
advance payment, a stage payment, or of
any other nature.
- Deposit the TDS on a current basis,
either at the concerned RRCO or directly
to RGR Account the next working day
following deduction.
- Submit all contractor payment details to
the concerned RRCO using Form IT-13.
What
are the Fines/Penalties?
The
following circumstances would result in
fines being applied:
- Where taxes have not been deducted at
source.
- Where taxes have not been deducted
correctly.
- Where taxes have been deducted correctly
but not deposited with RGR Account.
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