TDS Guidelines (Third Edition) - 0

TAX DEDUCTED AT SOURCE
Third Edition
Department of Revenue and Customs

Ministry of Finance
Bhutan
TABLE OF CONTENTS
1. INTRODUCTION 5
1.1 What is TDS? 5
1.2 What type of income is subject to TDS? 5
1.3 What are the objectives of TDS? 5
1.4 Legal Authority 5
1.5 Who shall deduct tax at Source? 6
1.6 What are the responsibilities of a withholding Agency? 6
1.7 What are the responsibilities of a taxpayer? 6
2. CORPORATE INCOME TAX 8
2.1 Full Tax Liability 8
2.1.1 Entities liable for TDS under Full Tax Liability 8
2.1.2 Incomes liable for TDS under Full Tax Liability 8
2.1.3 Rate of TDS under Full Tax Liability 8
2.2 Limited Tax Liability 9
2.2.1 Entities liable for TDS under Limited Tax Liability 9
2.2.2 Incomes liable for TDS under Limited Tax Liability 9
2.2.3 Rate of TDS under Limited Tax Liability 10
2.3 Incomes not liable for TDS 10
2.4 Companies under Tax Holidays 11
3. BUSINESS INCOME TAX 12
3.1 Full Tax Liability 12
3.1.1 Entities liable for TDS under Full Tax Liability: 12
3.1.2 Incomes liable for TDS under Full Tax Liability 12
3.1.3 Rate of TDS under Full Tax Liability 12
3.2 Limited Tax Liability 13
3.2.1 Entities liable for TDS under Limited Tax Liability 13
3.2.2 Incomes liable for TDS under Limited Tax Liability 13
3.2.3 TDS Rate under Limited Tax Liability 14
3.3 Income not liable for TDS 14
3.4 Business entities under Tax Holidays 15
4. EXEMPTED ORGANISATION 15
5. PERSONAL INCOME TAX 15
Tax Deducted at Source (3 rd Edition) 1
5.1 Persons or Individuals liable for TDS under PIT 15
5.2 Sources of Income liable for TDS 16
5.2.1 Income from Salary 16
a. Definition of Salary 16
c. Exemptions from TDS under Salary Income 17
b. TDS Rate 17
c. TDS for Special Category of Income 17
5.2.2 Rental Income 18
a. Definition of Rental Income 18
b. TDS Rate 18
5.2.3 Dividend Income 18
a. Definition of Dividend Income 18
b. TDS Rate 18
5.2.5 Income from Other Sources 18
a. Definition of Income from Other Sources 18
b. TDS Rate 18
6. DEDUCTION, TDS CHEQUES, DEPOSIT, ACCOUNTING AND
ADJUSTMENT OF TDS, FINES & PENALTIES 19
6.1 Deduction 19
6.1.1 Who and when should TDS be deducted? 19
6.2 What withholding agencies must do? 19
6.2.1 Preparation of TDS Cheques 19
6.2.2 Depositing TDS 19
6.2.3 Accounting of TDS 20
6.2.4 Receipt of TDS 20
6.2.5 Issuance of TDS Certificate 21
6.3 Compilation Error! Bookmark not defined.
6.4 Updating and Crediting 21
6.5 Adjustment 22
6.5.1 Adjustment of TDS 22
6.5.2 Documentation 22
7 TDS Defaults 22
7.1.1 Failure to deduct whole or part of tax at source; 22
7.1.2 Failure to deposit whole or part of the tax deducted at source; 22
7.1.3 Issuing a falsified TDS statement or information. 22
8 Fines and Penalties 22
8.1 Fines and Penalties as per the Income Tax Act 22
8.1.1 Failure to Deduct TDS 23
8.1.2 Failure to Deposit TDS 23
8.1.3 Prosecutions 23
8.2 Fines and Penalties as per the Negotiable Instrument Act, 2002 23
8.2.1 Dishonored Cheque 23
8.2.2 Clearing of Dishonored Cheque 23

Introduction
This booklet is updated based on the amendments made to the Income Tax Act of the Kingdom of
Bhutan, 2001. The latest amendments were approved during the Tenth Session of the First
Parliament in 2016.
The publication is designed to explain to the taxpayers and the withholding agencies about the
applicability of Tax Deducted at Source (TDS) on different sources of income captured under the
Income Tax Act and the Rules thereto. It is intended to assist the taxpayers and the withholding
agencies in knowing their responsibilities, rights and obligations while deducting and depositing
TDS.
This booklet is organized in two parts: Part I explain different sources of income liable for TDS
under CIT, BIT and PIT separately. Part II discusses the roles and responsibilities of withholding
agencies concerning deduction, deposit and accounting of TDS.
The information provided in this booklet is based on the amended Tax Law and Rules in force at
the time of printing the booklet. In case of difference in interpretation and meaning, the relevant
sections of the Income Tax Act and Rules will supersede those in this booklet.
For any additional information or clarifications, contact the concerned Regional Revenue and
Customs Office (RRCO) located in your own region or Tax Administration Division at the DRC
HQ, Thimphu. The addresses and telephone numbers are given at the back of the booklet.
This booklet is intended to serve as a general guide to TDS and will come into effect from 1 st June,
2018. For detailed clarification and guidance on TDS, please visit any of the RRCOs or the HQ in
person.

PART I
1. INTRODUCTION
1.1 What is TDS?

Tax Deducted at Source (TDS) is a preliminary estimate of tax liability payable on a Pay As You
Earn (PAYE) basis. It is deducted at source at the time of credited in the taxpayers books of
accounts or from the payments made to a taxpayer by a withholding agent and deposited to the
nearest RRCOs which is later, adjusted against the final tax liability unless otherwise specified.
TDS is not a separate or new form of tax, but a mode of collection on a current income basis. It is
intended to ease the taxpayers from the burden of having to pay tax at one time during the time of
filing.
1.2 What type of income is subject to TDS?

All incomes falling within the purview of BIT, CIT, and PIT under the Income Tax Act of the
Kingdom of Bhutan 2001, are subject to TDS. In principle, all corporate and business entities
falling under full tax liability are liable to income tax on worldwide income, whereas companies
and business entities under limited tax liability are liable to income tax on incomes sourced from
or within Bhutan.
1.3 What are the objectives of TDS?

The objective of TDS is:
● To ease the burden of tax payment by paying taxes as it is earned;
● To ensure effective collection of taxes;
● For timely mobilization of internal revenues.
TDS is an important source of information for ascertaining actual income and expenditure of a
taxpayer when tax audits are carried out.
1.4 Legal Authority

The authority to deduct TDS is provided by the following sections of the Income Tax Act of the
Kingdom of Bhutan, 2001 and the Rules thereto.
a. Chapter 3, Section 10, 11, 12, 13, 14, 15, 16, 17 and 18, General Provisions of the Income
Tax Act, 2001, mentions about the applicability of TDS on various sources of income.
b. Rule No. 4.2.1, 4.2.2, 4.2.2(a), 4.2.2(b), 4.2.2(c), 4.2.2(d), 4.2.2(e), 4.2.2(f), 4.2.2(g), and
4.2.3 of the Rules on the Income Tax Act, 2001 mentions about the procedures to withhold
taxes.
1.5 Who shall deduct tax at Source?
All government, semi-government, corporate bodies, private agencies/businesses, and
Individuals/Persons as specified in Table I below, are liable to deduct TDS. The authority and
responsibility to deduct TDS is provided by Chapter 3, Section 11 and 19 of the Income Tax Act,
2001 and the Rules thereto.
Table I
Sl. Source of
Withholding Agencies TDS Rates
No. Income
1 Employer or authorized representative Salary As per Annexure III
Government, Semi-Govt., & Non Govt.
2 Organizations (NGOs), Companies, Rental 5%
Businesses and Persons/Individuals.
3 Companies Dividend 10%
4 Financial Institutions Interest 5%
5 Tourism Council of Bhutan Tour Income 2%
2% for Bhutanese
Contract Awarder or authorized
6 Contract Income firms and 3% for Non-
representative
Bhutanese firms
Government, Semi-Govt., & Non-Govt.
Income from
7 Organizations (NGOs), Companies, 5%
Other Sources
Businesses and Persons/Individuals.
1.6 What are the responsibilities of a withholding Agency?

As per Section 19, Chapter 3, General Provisions of the Income Tax Act, 2001, the withholding
agency shall be responsible for the following
1) Deduct tax at source;
2) Deposit the tax deducted on the due date;
3) Submit information as per the requirement of the department and;
4) Issue TDS certificate as per Annexure V of this booklet.
1.7 What are the responsibilities of a taxpayer?

The taxpayer shall be responsible to inform the tax authorities if the withholding agency has not
deducted TDS or the deduction is lower than the rate prescribed. The taxpayer shall be also liable
to inform the tax authorities of the income earned and the amount of tax deducted at source, if any
(as per Section 20, Chapter 3, General Provisions of the Income Tax Act, 2001).
Further, taxpayers must inform the tax authorities within 3 months from the date of receipt of net
payment of the bill amount if the TDS amount deducted is not reflected/credited in the deductee

report. The taxpayer must, however, furnish the following details to the tax authority in order to
take timely measures:
● Name of the withholding agency

● Name and designation of the dealing official
● Contact Number
● Bill Number and Bill date
● Net Payment Cheque No. and cheque date.
● TDS amount.

2. CORPORATE INCOME TAX
2.1 Full Tax Liability
2.1.1 Entities liable for TDS under Full Tax Liability

Companies under full tax liability are those that are registered under the Companies Act of the
Kingdom of Bhutan, 2000. Therefore, all incomes earned or received by such entities or paid to
another taxable entity are subject to TDS, except for those covered under para 2.3 of this booklet.
2.1.2 Incomes liable for TDS under Full Tax Liability

Any incomes, not limited to the ones mentioned below, earned from the following business
activities are liable for TDS.
● Construction Income including sub-contract Incomes;
● Lease Income;
● Income by way of commission
● Income from Logging works;
● Income from Management Contracts;
● Income from Supplies;
● Transportation Income;
● Tour Income;
● Consultancy Income;
● Other Services Income;
● Any other income derived directly or indirectly from business activities falling
within the purview of CIT.
2.1.3 Rate of TDS under Full Tax Liability

Companies under full tax liability are liable to TDS at the rates prescribed below:
Sl. No Income Type TDS Rate

a Contract Income 2% of the gross amount
b Consultancy Income 2% of the gross amount
c Royalty Income 5% of the gross amount
d Interest Income 5% of the gross amount
e Dividend Income 10% of the gross amount
f Rental Income 5% of the gross amount
g Income from Other Sources 5% of the gross amount
Income from leasing, sub-
h 2% of the gross amount8u
letting or sub-contract business
2% of the gross tour operation income after netting
i Tour Operation Income
off royalty component
g Income by way of commission 2% of gross income by way of commission

2.2 Limited Tax Liability
2.2.1 Entities liable for TDS under Limited Tax Liability

Companies under limited tax liability are those companies and legal entities resident abroad that
are NOT registered under the Companies Act of the Kingdom of Bhutan, 2000, Limited Tax
liability for companies resident abroad shall commence on the date of activities giving rise to the
tax liability through a permanent establishment in Bhutan. It includes the following:
a. Companies or legal entities resident abroad, but doing business through a permanent
establishment in Bhutan;
b. Legal entities resident abroad but participating in a business in collaboration or on a

partnership basis with Bhutanese counterparts.
However, all Joint Venture (JV) operating a business in Bhutan under a temporary license/permit
issued by MoEA will not fall under limited tax liability. For the purpose of taxation, these entities
shall be treated as companies under full tax liability and liable to deduct TDS at the rates prescribed
under full tax liability.
2.2.2 Incomes liable for TDS under Limited Tax Liability

TDS or TDS in lieu of CIT under limited tax liability is limited to the following sources of incomes
derived from or within Bhutan.
a. Income received by legal entities resident abroad from activities such as preliminary
survey, exploration or extraction of mineral resources through permanent establishment in
Bhutan;
b. Income received by legal entities resident abroad from letting business in Bhutan to either
a Bhutanese entity or another legal entity resident abroad;
c. Income received by legal entities resident abroad from immovable property in Bhutan as
an owner, co-owner, and user of that property;
d. Income received by legal entities resident abroad as a contract income/works contract
income from sources in Bhutan;
e. Income received by legal entities resident abroad for services rendered in Bhutan;
f. Income received by legal entities resident abroad as dividend from sources in Bhutan;
g. Income received by legal entities resident abroad as royalties from sources in Bhutan;
h. Income received by legal entities resident abroad as interest from sources in Bhutan;

i. Income received by way of grants or loans under bi-lateral/multi-lateral arrangements
either directly or indirectly through agencies in Bhutan for project executed in Bhutan. E.g.
Income received by a foreign consultant or contractors from donor assisted projects
executed in Bhutan;
j. Interest paid or borne on indebtedness in connection with the permanent establishment in
Bhutan;
k. Royalties paid by a permanent establishment in Bhutan for its own use and
l. Fees paid by a permanent establishment for services availed.
m. Payments made to labour agents and labour contractors
2.2.3 Rate of TDS under Limited Tax Liability

Companies under limited tax liability are liable to TDS on the following sources at the rate
prescribed below.

Contract Income including works 3% of the gross amount
a
contract
Income from sub-letting or sub-contract
h 3% of the gross amount
business
i Income by way of commission 3% of gross amount
j Any other services 3% of the gross amount
TDS deducted under limited tax liability will be treated as the final tax and they are exempted
from filing tax return.
2.3 Incomes not liable for TDS

The following incomes/transactions are not liable for TDS:
a. Purchases made for retailing purposes by trading units;

b. Raw materials and packaging materials purchased by manufacturing entities
c. Customs duty and customs clearing charges paid on behalf of the importer by transporters
shall be excluded when computing TDS on transport income;

d. All authorized dealers/commission agents of motor vehicles, two wheelers and cement
agents within Bhutan;
e. Direct purchases of airline/railway tickets or through travel agents;
f. Distributors of petroleum products and BOD fuel advance;
g. Utility bill payments e.g. City corporation bills, Survey bills, National Library bills,
telephone bills, cable operators’ bills, insurance premium payments, electricity bills, RSTA
vehicle renewal and fitness payments, etc;
h. On-the-spot petty cash purchases, referring to those purchases made without a supply order
or competitive bid, not exceeding Nu. 20,000 per transaction;
i. Sales Tax on hotels and service charges shall be excluded when computing TDS;
j. Payments involving from one Govt. agency to another Govt. agency;
k. Purchase of goods from outside Bhutan. However, services availed from legal
entities/individuals outside Bhutan shall be liable for TDS;
l. Under-taking of projects by Govt. agencies;
m. Training fees paid for training conducted outside Bhutan by institutes who are resident
abroad. However, if the training is conducted in Bhutan by an Institute resident abroad,
TDS shall be applicable;
n. Works awarded to local communities endorsed by Gewog Yargye Tshogdu (GYT)
o. Cash crop compensation made to land owner
p. Payment of rent for a property located outside Bhutan
q. Customs duty and de-stuffing charges paid on behalf of the importer shall be excluded
which computing the TDS on transporters.
2.4 Companies under Tax Holidays

All taxable Entities enjoying tax holiday as per Notifications No. DRC/TAX-
A&L/HOL/2010/3656 dated 2nd April, 2010 are not liable for TDS during the tax holiday period.
The updated list of eligible companies at the time of printing this booklet is given in Annexure I.
The companies should furnish to withholding agencies tax holiday approval letter issued by
DRC/RRCO to avail TDS exemption. However, the units will be required to submit the books of
accounts at the time of filing for verification by the RRCOs concerned.

3. BUSINESS INCOME TAX
3.1 Full Tax Liability
3.1.1 Entities liable for TDS under Full Tax Liability:

All individual business houses not incorporated under the Companies Act of the Kingdom of
Bhutan, 2000 are termed as businesses under full tax liability. It includes all those individual
business houses operating under a trade license or permit issued by MoEA and BICMA.
3.1.2 Incomes liable for TDS under Full Tax Liability

Any incomes earned/received from the business activities, not limited to the ones mentioned
below, are liable for TDS.
● Construction Income including sub-contract incomes;

● Income by way of commission
● Income from Logging works;
● Income from Management works;
● Income from Supplies;
● Transportation Income;
● Tour Income;
● Consultancy Income;
● Other Services Income;
● Any other income derived directly or indirectly from business activities falling within the
purview of BIT.
3.1.3 Rate of TDS under Full Tax Liability

Business houses under full tax liability are liable for TDS at the rates prescribed below:

a Contract Income 2% of the gross amount
Income from leasing, sub-letting or
g 2% of the gross amount
sub-contract business
2% of the gross tour operation income after
h Tour Operation Income
netting off royalty component
2% of the gross income by way of
i Commission by way of income
commission

3.2 Limited Tax Liability
3.2.1 Entities liable for TDS under Limited Tax Liability

Any business houses or individuals, who are resident abroad but receiving income from businesses
conducted through a permanent establishment in Bhutan, are termed as businesses falling under
limited tax liability. It includes the following:
a. Individuals or businesses resident abroad but doing business in Bhutan through permanent
establishment;
b. Individuals or businesses resident abroad but participating in a business in Bhutan in

collaboration or on a partnership basis with a Bhutanese counterpart.
However, Joint Venture (JV) operating a business in Bhutan under a temporary license/permit
issued by MoEA will not fall under limited tax liability.
3.2.2 Incomes liable for TDS under Limited Tax Liability

Income liable for TDS or TDS in lieu of BIT is limited to the sources from or within Bhutan as
given below:
a. Income received from sub-letting or sub-contracting business;

b. Income received from immovable property in Bhutan as an owner, co-owner, and user of
that property;
c. Income received from contract including works contract;
d. Income received from services rendered in Bhutan;
e. Income received as dividend from sources in Bhutan;
f. Income received as royalties from sources in Bhutan;
g. Income received as interest from sources in Bhutan;
h. Income received by way of grants or loans under bi-lateral/multi-lateral arrangements
either directly or indirectly through agencies in Bhutan for project executed in Bhutan. E.g.
Income received by a foreign consultant or contractors from donor assisted projects
executed in Bhutan;
i. Interest paid or borne on indebtedness in connection with the permanent establishment in
Bhutan;
j. Royalties paid by a permanent establishment in Bhutan for its own use and
k. Fees paid by a permanent establishment for services availed.

l. Payments made to labour agents and labour contractors
3.2.3 TDS Rate under Limited Tax Liability

Businesses under limited tax liability are liable for TDS at the rate prescribed below:

Contract Income including works 3% of the gross amount
a
contract
Income from sub-letting or sub-
h 3% of the gross amount
contract business
Income earned by way of
I 3% of the gross amount
commission
I Any other services 3% of the gross amount
3.3 Income not liable for TDS

a. Purchases made for retailing purposes by trading units;
b. Customs duty and customs clearing charges paid on behalf of the importer by transporters
shall be excluded when computing TDS on transport income;
c. All authorized dealers/commission agents of motor vehicles, two wheelers and cement
agents within Bhutan;
d. Travel agents dealing in airline/railway tickets;
e. Distributors of petroleum products and BOD fuel advance;
f. Utility bill payments; e.g. City corporation bills, Survey bills, National Library bills,
telephone bills, cable operators’ bills, insurance premium payments, electricity bills, RSTA
vehicle renewal and fitness payments, etc;
g. On-the-spot petty cash purchases, referring to those purchases made without a supply order
or competitive bid, not exceeding Nu. 20,000 per transaction;
h. Sales Tax on hotels and service charges shall be excluded when computing TDS;
i. Payments involving from one Govt. agency to another Govt. agency;

j. Purchase of goods from outside Bhutan. However, services availed from legal
entities/individuals outside Bhutan shall be liable for TDS;
k. Under-taking of projects by Govt. agencies;
l. Training fees paid to training institutes outside Bhutan. However, if the training is
conducted in Bhutan by an Institute resident abroad, TDS shall be applicable;
m. Works awarded to local communities and endorsed by Gewog Yargye Tshogdu (GYT);
n. Cash crop compensation made to land owners.
3.4 Business entities under Tax Holidays

All businesses entities who are granted Income tax holiday as per Notifications No. DRC/TP-
02/2002/878 dated 13th September 2002 DRC/TAX-A&L/HOL/2010/3656 dated 2nd April, 2010
and Fiscal Incentive of Bhutan 2017 are not liable for TDS during the tax holiday period. The
updated list of eligible business entities at the time of printing this booklet is given in Annexure
II. However, the units will be required to submit the books of accounts at the time filing for
verification by the RRCOs concerned. In addition, such business entities must deduct and deposit
TDS from payments during the time made to another taxable entity.
4. EXEMPTED ORGANISATION
Exempted organizations are required to register themselves with DRC to obtain the exempt
organization status. The exempt organizations must furnish a copy of the exempt organization
certificate issued by DRC to withholding agencies to avail TDS exemption. The updated list of
exempt organizations is given in Annexure IV. However, such organizations must deduct and
deposit TDS from payments made to another taxable entity.
5. PERSONAL INCOME TAX
5.1 Persons or Individuals liable for TDS under PIT

All persons or individuals earning or receiving income from sources specified under 5.2 of this
booklet are subject to TDS.
a. A person, for the purpose of PIT/TDS, means citizens, residents and other persons. Citizen
refers to those individuals possessing the citizenship of the Kingdom of Bhutan (Rule No. 1.2,
Part III of the ITA, 2001). Resident refers to non Bhutanese whose stay in the kingdom of
Bhutan during an income year is equal to or more than six months (Rule No. 1.3, Part III of
the ITA, 2001); whereas, other person refers to non Bhutanese whose stay in the kingdom of
Bhutan during an income year is less than six months ((Rule No. 1.4, Part III of the ITA,
2001).
b. Income year means a calendar year starting from the 1st of January to the 31st of December.
c. Residents, as defined in 5.1 (a) of this booklet, are liable for TDS on income received from
sources from or within Bhutan or for the work performed in Bhutan. TDS deducted will be
adjusted at the time of filing returns.
d. Other persons, as defined under 5.1(a) of this booklet, are liable for TDS on income received
from sources from or within Bhutan or for work performed in Bhutan. TDS deducted shall be
treated as final tax and returns need not be filed.
e. Bhutanese citizens working in Bhutan for international organizations and donor/externally

supported projects are liable for TDS. The payment and deposit of TDS will be on a quarterly
basis for such individuals. However, Bhutanese citizens working in the UN
organizations/branches within the country are not liable for TDS. The agency will be required
to update and share the list of Bhutanese individuals employed with the Department on an
annual basis.
f. 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 are liable for TDS.
g. Non Bhutanese working in the Bhutanese embassies and Consulates are liable for TDS.
5.2 Sources of Income liable for TDS

Income from sources in Bhutan refers to those incomes earned or derived from taxable sources in
Bhutan or for work performed in Bhutan. It includes the following:
● Salary Income;
● Rental Income;
● Dividend Income;
● Income from Other Sources.
5.2.1 Income from Salary
a. Definition of Salary
Income from salary shall include everything received in money of monies worth from the employer
in accordance with the rules prescribed by Ministry but excluding leave travel concession,
travelling allowance and daily allowance. Income from salary, for the purpose of PIT/TDS,
includes pay, wages, remuneration, bonus, commission, fees, children’s educational allowances,
and benefits received free or at a concessional rate. It also includes retirement benefits received on
a monthly or periodical basis such as pension or Lump sum payments made for services rendered
to employers.TDS on income from salary is payable on the net salary i.e. (Gross Salary minus
Provident Fund and Group Insurance Scheme).
c. Exemptions from TDS under Salary Income

The following incomes are exempted from TDS under salary income provided they are within the
limits prescribed by the Government from time to time.
● Leave Travel Concession (LTC) up to Nu. 15,000;
● Travel Allowances (TA) and Daily Allowances (DA) given while on tours;
● Transfer Grants and Transportation Costs given on transfers;
● Retirement Benefits paid in lump sum in the form of gratuity and provident fund at the
time of retirement (normal and early retirement) or retrenchment;
● All allowances and free or subsidized facilities of Armed Forces;
● Stipend received by trainees, exchange students and living allowances received by
volunteers working in Bhutan;
● Foreign Allowance (FA) and Representational Grants (RG) given to the civil servants of
the RGOB stationed outside Bhutan; However, other allowances shall continue to be liable
for TDS
● Children’s Education Allowance and other compensatory allowances received by foreign
employees under deputation in Bhutan.
b. TDS Rate
TDS on Net salary income (Gross Salary Income minus GPF and GIS) must be deducted as per
the Annexure III of the Rules (fourth edition) on the Income Tax Act of the Kingdom of Bhutan,
2001.
c. TDS for Special Category of Income

TDS on salary received in arrears must be pro-ratised on a monthly basis and deducted as per the
slabs and TDS amount prescribed in Annexure III of the Rules on Income Tax Act.
TDS on non-licensed consultancy income must be deducted as per Annexure III of the Income Tax
Rules for both citizens and residents. The total consultancy income must be broken down into a
monthly payment basis (by dividing the total income by number of months taken to complete
consultancy work) and deducted accordingly. The number of months, however, should be as per
the contract agreement between the consultants and contract awarder.

5.2.2 Rental Income
a. Definition of Rental Income

Income from rental property means income received or earned from hire of land, building, houses,
factory buildings, warehouses and any other structures earning rental income.
b. TDS Rate
TDS on rental income must be deducted at the rate of 5% on the gross rent paid for hiring rental
properties by the govt., semi-govt., NGOs, Companies and Business entities. However, if the
property is rented out to an individual, no TDS will be applicable.
5.2.3 Dividend Income
a. Definition of Dividend Income

Dividend income means income received from shareholding in a company registered in Bhutan.
Dividend income received in a form of bonus shares is not liable for TDS.
b. TDS Rate
TDS must be deducted at the rate of 10% of the gross amount, if the total dividend payment is
more than Nu. 10,000. TDS is not applicable for dividend payments less than or equal to Nu.
10,000 per annum. However, if the dividend payment exceeds Nu.10,000, TDs should be deducted
on the whole amount. TDS is also applicable on dividend payments made to other persons even
if the dividend payment is less than or equal to Nu. 10,000 per annum. TDS on dividend payment
should be deducted in a year it is distributed.
5.2.5 Income from Other Sources
a. Definition of Income from Other Sources

Income from other sources means income earned from the hire of privately owned plant &
machineries, vehicles excluding trucks and taxis, and income from intellectual property rights.
Intellectual property shall mean income from copyrights, patent, trademark, design, model etc.
However, income earned from film making activities such as script writing, directing, acting, etc.
shall be taxed under Income from Salary.
b. TDS Rate
TDS on income from other sources must be deducted at the rate of 5% of the gross income. TDS
on income from other sources must be deducted on an accrual basis.

PART II
6. DEDUCTION, TDS CHEQUES, DEPOSIT, ACCOUNTING AND ADJUSTMENT

OF TDS, FINES & PENALTIES
6.1 Deduction
6.1.1 Who and when should TDS be deducted?

All government and Semi-govt. agencies, NGOs, Companies, Businesses and Persons/ Individuals
must deduct at the time of bill payment/disbursement or credit in the books of accounts
whichever is earlier, deduct TDS as per the rates prescribed in Table I, Page 2 of this booklet. The
amount deducted must be deposited to the concerned RRCO on or before 10th day of the month
following the date of deduction.
6.2 What withholding agencies must do?
6.2.1 Preparation of TDS Cheques

All withholding agents must prepare a separate cheque for every TDS amount deducted for
depositing with the RRCO concerned.
Exceptions
However, TDS withheld from the following sources of income can be prepared in one consolidated
cheque for depositing with RCCO concerned as the case may be.
a. TDS on Salary Income withheld by employers;
b. TDS on Tour Operation Income withheld by TCB;
c. TDS on Interest Income withheld by BNBL and BOBL;
d. TDS on Dividend Income withheld by all companies;
e. TDS amounting to Nu. 1000 and less. However, TDS amount exceeding Nu. 1000 per
transaction must have a separate Cheque prepared; see exceptions under 6.2.2 (c) and
6.2.5 (b) for details.
6.2.2 Depositing TDS

Following the deduction of TDS and issue of net payment cheques to the
parties concerned, all TDS deducted must be deposited with the RRCO
concerned on or before 10th day of the month following the date of deduction.
While making the deposit, the withholding agencies must ensure that a
Revenue Money Receipt is obtained from RRCO for every Cheque deposited
to RRCO. The withholding agencies can also opt to make the payment online

using the online payment feature in RAMIS. Please refer the "How to make
Payment" feature in RAMIS for assistance/help.
Exceptions
(a) TDS collection made by BOB and its branches on interest income must be transferred
directly into the RGR account allotted to them. They will be required to submit copies of the
TDS schedules and Bank Statements in a standard format prescribed by DRC to the RRCO
concerned. The direct transfer No. must be clearly mentioned in the statement.
(b) Similarly, TDS on interest income deducted and deposited by BNBL and its branches into
their current account must be transferred to the RGR account maintained with the BOBL.
They will be required to submit copies of the TDS schedules and Bank Statements in a
standard format prescribed by DRC to the RRCO concerned. The direct transfer number.
must be clearly mentioned in the statement.
(c) TDS amounting to Nu. 1000 and below as referred in 6.2.1 (e) must be deposited with the
RRCO concerned latest by the 10th day of the month following the date of deduction to avoid
fines and penalties, and TDS certificate must be issued by the concerned withholding
agencies with either receipt No. or Cheque No.
(d) TDS collections made by withholding agencies in the remote dzongkhags, (e.g. Gasa
Dzongkhag or any other such Dzongkhags) without any banking facilities may be deposited
as and when TDS amount exceeds Nu. 15000/ or within one month, whichever is earlier.
6.2.3 Accounting of TDS

The RRCOs concerned will ensure that TDS amounts remitted by the withholding agencies are
correctly accounted for against each individual or entities for tax adjustment at the time of the
filing.
6.2.4 Receipt of TDS

The Cash Counter Unit under Revenue Accounts & Audit Section shall ensure that:
● TDS amount is collected as per the demand number/deposit voucher number generated through
RAMIS;
● Revenue Money Receipt (RMR) is issued in acknowledgement of TDS amount received;
● TDS deposits are correctly accounted, reconciled and updated in RAMIS;

6.2.5 Issuance of TDS Certificate
The withholding agencies must issue a standard TDS certificate as prescribed in Annexure V at
the time of bill payment/disbursement or credit in the books of accounts (the TDS information
available in RAMIS shall be exclusively used for the verification purpose by the Tax Officials).
However, Withholding agencies using Public Expenditure Management System (PEMS) must
generate TDS certificate from the PEMS-TDS Integrated System and issue on the spot while
disbursing the bill amount. The TDS Certificate should include the following details:
a. Taxpayer Number (TPN)/Entity Code;

b. Name of the party from whom the deduction is made;
c. Date of deduction;
d. Type of Income;
e. Gross Income;
f. TDS Amount deducted;
g. Demand number/deposit voucher number
h. Cheque No/Revenue Receipt No. and;
i. Cheque Date/ Revenue Receipt date.
The cheque Number details should be clearly mentioned in the TDS Certificate for proper tax
adjustment at the time of filing. It shall be the responsibility of the parties concerned to furnish the
TPN details to the withholding agencies.
The above procedures must be followed in respect of all income sources except under the following
cases.
Exceptions
a. TDS Certificate for Salary Income may be issued annually at the end of year, unless otherwise
a taxpayer requires it for purposes other than for PIT filing.
b. TDS Certificate for TDS amounting to Nu. 1000 and less may be issued latest by the 10 th day
of the month following the date of deduction to the parties concerned.
6.3 Updating and Crediting

The Tax Administration Section shall be responsible for:
● Updating TDS information in the RAMIS , maintaining and filing of all TDS records and;
● Verifying whether TDS is deducted as per the rates prescribed in the rules or not

6.5 Adjustment
6.5.1 Adjustment of TDS

The TDS amount deposited by withholding agencies will be adjusted against the tax liability of
the company/business units/ individuals at the time of:
a. Advance tax payment, i.e., during the filing of half yearly returns for units paying CIT and
BIT;
b. Provisional tax payment, i.e., during the filing of annual tax returns for units paying CIT, BIT
and PIT;
c. Final tax payment after Desk Assessment or Field Assessment as the case maybe for those
paying CIT, BIT and PIT;
d. TDS amount will be adjusted on Income Year basis.
6.5.2 Documentation
The adjustment of TDS as specified above shall be given subject to the fulfillment of the following
conditions.
a. Submission of proper books of accounts in case of large and medium business entities;
b. Submission of basic records in case of small entities and;
c. On production of a standard TDS certificate issued by the withholding agencies
7 TDS DEFAULTS
7.1.1 Failure to deduct whole or part of tax at source;
7.1.2 Failure to deposit whole or part of the tax deducted at source;
7.1.3 Issuing a falsified TDS statement or information.
8 FINES AND PENALTIES
8.1 Fines and Penalties as per the Income Tax Act

As per Chapter 5, section 34 of the Income Tax Act of the Kingdom of Bhutan, 2001 and the
Rules thereto, all withholding agencies shall be liable for the following fines and penalties.

8.1.1 Failure to Deduct TDS
Failure to deduct whole or part of tax at sources as required under the Income Tax Act shall attract
a penal interest at the rate of 24 percent per annum on the amount due in addition to the tax in
arrears; or
8.1.2 Failure to Deposit TDS

Failure to deposit whole or part of the tax deducted at source as required under the Income Tax
Act, shall attract a penal interest at the rate of 24 percent per annum from the due date in addition
to the tax in arrears.
8.1.3 Prosecutions
Notwithstanding the above provisions, prosecutions shall be initiated for the following offences:
● Making a false statement or deliver false accounts; (Note - issuing a falsified TDS
certificate to the parties shall constitute as making a false statement under the Income Tax
Act)
● Willful act or omission to deduct tax at source or pay tax to the Govt.;
● Willful attempt to evade tax or failure to pay fines, penalty or interest imposed under the
Income Tax Act of the Kingdom of Bhutan, 2001;
● Willful act or omission to produce books of accounts and documents.
8.2 Fines and Penalties as per the Negotiable Instrument Act, 2002
As per the Negotiable Instrument Act of the Kingdom of Bhutan 2002, the cases mentioned below
shall attract the following fines and penalties.
8.2.1 Dishonored Cheque

Cheques dishonored by banks due to lack of sufficient fund shall attract a compensation of
Nu.1000 in addition to 24% late interest per annum.
8.2.2 Clearing of Dishonored Cheque

Dishonored cheques must be cleared within fifteen days of the intimation,
failing which legal action will be initiated.

Annexure – V
TDS CERTIFICATE
Royal Government of Bhutan
Date:
Name of the Withholding Agency:
TPN/Agency Code:
Location:
Name of Supplier:
TPN:
Entity Code:
Location:
Gross TDS TDS

Month Cheque No. Cheque Date Remarks
Income Rate Amount
Total
I hereby certify that the information given in this certificate is true and correct to the best of my
knowledge. In case any information is found incorrect, I shall be liable for fines and penalties as
per Chapter 5, General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001.
Name & Signature of Disbursing Officer

Office Seal

ANNEXURE -III
REVISED TDS SCHEDULE FOR MONTHLY SALARY INCOME
Monthly Salary TDS Monthly Salary TDS Monthly Salary TDS

From To Amount From To Amount From To Amount
0 16667 0 21701 21800 562 27001 27100 1357
16668 16700 3 21801 21900 577 27101 27200 1372
16701 16800 13 21901 22000 592 27201 27300 1387
16801 16900 23 22001 22100 607 27301 27400 1402
16901 17000 33 22101 22200 622 27401 27500 1417
17001 17100 43 22201 22300 637 27501 27600 1432
17101 17200 53 22301 22400 652 27601 27700 1447
17201 17300 63 22401 22500 667 27701 27800 1462
17301 17400 73 22501 22600 682 27801 27900 1477
17401 17500 83 22601 22700 697 27901 28000 1492
17501 17600 93 22701 22800 712 28001 28100 1507
17601 17700 103 22801 22900 727 28101 28200 1522
17701 17800 113 22901 23000 742 28201 28300 1537
17801 17900 123 23001 23100 757 28301 28400 1552
17901 18000 133 23101 23200 772 28401 28500 1567
18001 18100 143 23201 23300 787 28501 28600 1582
18101 18200 153 23301 23400 802 28601 28700 1597
18201 18300 163 23401 23500 817 28701 28800 1612
18301 18400 173 23501 23600 832 28801 28900 1627
18401 18500 183 23601 23700 847 28901 29000 1642
18501 18600 193 23701 23800 862 29001 29100 1657
18601 18700 203 23801 23900 877 29101 29200 1672
18701 18800 213 23901 24000 892 29201 29300 1687
18801 18900 223 24001 24100 907 29301 29400 1702
18901 19000 233 24101 24200 922 29401 29500 1717
19001 19100 243 24201 24300 937 29501 29600 1732
19101 19200 253 24301 24400 952 29601 29700 1747
19201 19300 263 24401 24500 967 29701 29800 1762
19301 19400 273 24501 24600 982 29801 29900 1777
19401 19500 283 24601 24700 997 29901 30000 1792
19501 19600 293 24701 24800 1012 30001 30100 1807
19601 19700 303 24801 24900 1027 30101 30200 1822
19701 19800 313 24901 25000 1042 30201 30300 1837
19801 19900 323 25001 25100 1057 30301 30400 1852
19901 20000 333 25101 25200 1072 30401 30500 1867
20001 20100 343 25201 25300 1087 30501 30600 1882
20101 20200 353 25301 25400 1102 30601 30700 1897
20201 20300 363 25401 25500 1117 30701 30800 1912
20301 20400 373 25501 25600 1132 30801 30900 1927
20401 20500 383 25601 25700 1147 30901 31000 1942
20501 20600 393 25701 25800 1162 31001 31100 1957

20601 20700 403 25801 25900 1177 31101 31200 1972
20701 20800 413 25901 26000 1192 31201 31300 1987
20801 20833 417 26001 26100 1207 31301 31400 2002
20834 20900 427 26101 26200 1222 31401 31500 2017
20901 21000 442 26201 26300 1237 31501 31600 2032
21001 21100 457 26301 26400 1252 31601 31700 2047
21101 21200 472 26401 26500 1267 31701 31800 2062
21201 21300 487 26501 26600 1282 31801 31900 2077
21301 21400 502 26601 26700 1297 31901 32000 2092
21401 21500 517 26701 26800 1312 32001 32100 2107
21501 21600 532 26801 26900 1327 32101 32200 2122
21601 21700 547 26901 27000 1342 32201 32300 2137

32301 32400 2152 37601 37700 2947 42801 42900 3788
32401 32500 2167 37701 37800 2962 42901 43000 3808
32501 32600 2182 37801 37900 2977 43001 43100 3828
32601 32700 2197 37901 38000 2992 43101 43200 3848
32701 32800 2212 38001 38100 3007 43201 43300 3868
32801 32900 2227 38101 38200 3022 43301 43400 3888
32901 33000 2242 38201 38300 3037 43401 43500 3908
33001 33100 2257 38301 38400 3052 43501 43600 3928
33101 33200 2272 38401 38500 3067 43601 43700 3948
33201 33300 2287 38501 38600 3082 43701 43800 3968
33301 33400 2302 38601 38700 3097 43801 43900 3988
33401 33500 2317 38701 38800 3112 43901 44000 4008
33501 33600 2332 38801 38900 3127 44001 44100 4028
33601 33700 2347 38901 39000 3142 44101 44200 4048
33701 33800 2362 39001 39100 3157 44201 44300 4068
33801 33900 2377 39101 39200 3172 44301 44400 4088
33901 34000 2392 39201 39300 3187 44401 44500 4108
34001 34100 2407 39301 39400 3202 44501 44600 4128
34101 34200 2422 39401 39500 3217 44601 44700 4148
34201 34300 2437 39501 39600 3232 44701 44800 4168
34301 34400 2452 39601 39700 3247 44801 44900 4188
34401 34500 2467 39701 39800 3262 44901 45000 4208
34501 34600 2482 39801 39900 3277 45001 45100 4228
34601 34700 2497 39901 40000 3292 45101 45200 4248
34701 34800 2512 40001 40100 3307 45201 45300 4268
34801 34900 2527 40101 40200 3322 45301 45400 4288
34901 35000 2542 40201 40300 3337 45401 45500 4308
35001 35100 2557 40301 40400 3352 45501 45600 4328
35101 35200 2572 40401 40500 3367 45601 45700 4348
35201 35300 2587 40501 40600 3382 45701 45800 4368
35301 35400 2602 40601 40700 3397 45801 45900 4388
35401 35500 2617 40701 40800 3412 45901 46000 4408
35501 35600 2632 40801 40900 3427 46001 46100 4428
35601 35700 2647 40901 41000 3442 46101 46200 4448
35701 35800 2662 41001 41100 3457 46201 46300 4468
35801 35900 2677 41101 41200 3472 46301 46400 4488
35901 36000 2692 41201 41300 3487 46401 46500 4508
36001 36100 2707 41301 41400 3502 46501 46600 4528
36101 36200 2722 41401 41500 3517 46601 46700 4548
36201 36300 2737 41501 41600 3532 46701 46800 4568
36301 36400 2752 41601 41666 3542 46801 46900 4588
36401 36500 2767 41667 41700 3548 46901 47000 4608
36501 36600 2782 41701 41800 3568 47001 47100 4628
36601 36700 2797 41801 41900 3588 47101 47200 4648
36701 36800 2812 41901 42000 3608 47201 47300 4668
36801 36900 2827 42001 42100 3628 47301 47400 4688
36901 37000 2842 42101 42200 3648 47401 47500 4708
37001 37100 2857 42201 42300 3668 47501 47600 4728
37101 37200 2872 42301 42400 3688 47601 47700 4748
37201 37300 2887 42401 42500 3708 47701 47800 4768
37301 37400 2902 42501 42600 3728 47801 47900 4788
37401 37500 2917 42601 42700 3748 47901 48000 4808
37501 37600 2932 42701 42800 3768 48001 48100 4828

48101 48200 4848 53401 53500 5908 58701 58800 6968
48201 48300 4868 53501 53600 5928 58801 58900 6988
48301 48400 4888 53601 53700 5948 58901 59000 7008
48401 48500 4908 53701 53800 5968 59001 59100 7028
48501 48600 4928 53801 53900 5988 59101 59200 7048
48601 48700 4948 53901 54000 6008 59201 59300 7068
48701 48800 4968 54001 54100 6028 59301 59400 7088
48801 48900 4988 54101 54200 6048 59401 59500 7108
48901 49000 5008 54201 54300 6068 59501 59600 7128
49001 49100 5028 54301 54400 6088 59601 59700 7148
49101 49200 5048 54401 54500 6108 59701 59800 7168
49201 49300 5068 54501 54600 6128 59801 59900 7188
49301 49400 5088 54601 54700 6148 59901 60000 7208
49401 49500 5108 54701 54800 6168 60001 60100 7228
49501 49600 5128 54801 54900 6188 60101 60200 7248
49601 49700 5148 54901 55000 6208 60201 60300 7268
49701 49800 5168 55001 55100 6228 60301 60400 7288
49801 49900 5188 55101 55200 6248 60401 60500 7308
49901 50000 5208 55201 55300 6268 60501 60600 7328
50001 50100 5228 55301 55400 6288 60601 60700 7348
50101 50200 5248 55401 55500 6308 60701 60800 7368
50201 50300 5268 55501 55600 6328 60801 60900 7388
50301 50400 5288 55601 55700 6348 60901 61000 7408
50401 50500 5308 55701 55800 6368 61001 61100 7428
50501 50600 5328 55801 55900 6388 61101 61200 7448
50601 50700 5348 55901 56000 6408 61201 61300 7468
50701 50800 5368 56001 56100 6428 61301 61400 7488
50801 50900 5388 56101 56200 6448 61401 61500 7508
50901 51000 5408 56201 56300 6468 61501 61600 7528
51001 51100 5428 56301 56400 6488 61601 61700 7548
51101 51200 5448 56401 56500 6508 61701 61800 7568
51201 51300 5468 56501 56600 6528 61801 61900 7588
51301 51400 5488 56601 56700 6548 61901 62000 7608
51401 51500 5508 56701 56800 6568 62001 62100 7628
51501 51600 5528 56801 56900 6588 62101 62200 7648
51601 51700 5548 56901 57000 6608 62201 62300 7668
51701 51800 5568 57001 57100 6628 62301 62400 7688
51801 51900 5588 57101 57200 6648 62401 62500 7708
51901 52000 5608 57201 57300 6668 62501 62600 7728
52001 52100 5628 57301 57400 6688 62601 62700 7748
52101 52200 5648 57401 57500 6708 62701 62800 7768
52201 52300 5668 57501 57600 6728 62801 62900 7788
52301 52400 5688 57601 57700 6748 62901 63000 7808
52401 52500 5708 57701 57800 6768 63001 63100 7828
52501 52600 5728 57801 57900 6788 63101 63200 7848
52601 52700 5748 57901 58000 6808 63201 63300 7868
52701 52800 5768 58001 58100 6828 63301 63400 7888
52801 52900 5788 58101 58200 6848 63401 63500 7908
52901 53000 5808 58201 58300 6868 63501 63600 7928
53001 53100 5828 58301 58400 6888 63601 63700 7948
53101 53200 5848 58401 58500 6908 63701 63800 7968
53201 53300 5868 58501 58600 6928 63801 63900 7988
53301 53400 5888 58601 58700 6948 63901 64000 8008

64001 64100 8028 69301 69400 9088 74601 74700 10148
64101 64200 8048 69401 69500 9108 74701 74800 10168
64201 64300 8068 69501 69600 9128 74801 74900 10188
64301 64400 8088 69601 69700 9148 74901 75000 10208
64401 64500 8108 69701 69800 9168 75001 75100 10228
64501 64600 8128 69801 69900 9188 75101 75200 10248
64601 64700 8148 69901 70000 9208 75201 75300 10268
64701 64800 8168 70001 70100 9228 75301 75400 10288
64801 64900 8188 70101 70200 9248 75401 75500 10308
64901 65000 8208 70201 70300 9268 75501 75600 10328
65001 65100 8228 70301 70400 9288 75601 75700 10348
65101 65200 8248 70401 70500 9308 75701 75800 10368
65201 65300 8268 70501 70600 9328 75801 75900 10388
65301 65400 8288 70601 70700 9348 75901 76000 10408
65401 65500 8308 70701 70800 9368 76001 76100 10428
65501 65600 8328 70801 70900 9388 76101 76200 10448
65601 65700 8348 70901 71000 9408 76201 76300 10468
65701 65800 8368 71001 71100 9428 76301 76400 10488
65801 65900 8388 71101 71200 9448 76401 76500 10508
65901 66000 8408 71201 71300 9468 76501 76600 10528
66001 66100 8428 71301 71400 9488 76601 76700 10548
66101 66200 8448 71401 71500 9508 76701 76800 10568
66201 66300 8468 71501 71600 9528 76801 76900 10588
66301 66400 8488 71601 71700 9548 76901 77000 10608
66401 66500 8508 71701 71800 9568 77001 77100 10628
66501 66600 8528 71801 71900 9588 77101 77200 10648
66601 66700 8548 71901 72000 9608 77201 77300 10668
66701 66800 8568 72001 72100 9628 77301 77400 10688
66801 66900 8588 72101 72200 9648 77401 77500 10708
66901 67000 8608 72201 72300 9668 77501 77600 10728
67001 67100 8628 72301 72400 9688 77601 77700 10748
67101 67200 8648 72401 72500 9708 77701 77800 10768
67201 67300 8668 72501 72600 9728 77801 77900 10788
67301 67400 8688 72601 72700 9748 77901 78000 10808
67401 67500 8708 72701 72800 9768 78001 78100 10828
67501 67600 8728 72801 72900 9788 78101 78200 10848
67601 67700 8748 72901 73000 9808 78201 78300 10868
67701 67800 8768 73001 73100 9828 78301 78400 10888
67801 67900 8788 73101 73200 9848 78401 78500 10908
67901 68000 8808 73201 73300 9868 78501 78600 10928
68001 68100 8828 73301 73400 9888 78601 78700 10948
68101 68200 8848 73401 73500 9908 78701 78800 10968
68201 68300 8868 73501 73600 9928 78801 78900 10988
68301 68400 8888 73601 73700 9948 78901 79000 11008
68401 68500 8908 73701 73800 9968 79001 79100 11028
68501 68600 8928 73801 73900 9988 79101 79200 11048
68601 68700 8948 73901 74000 10008 79201 79300 11068
68701 68800 8968 74001 74100 10028 79301 79400 11088
68801 68900 8988 74101 74200 10048 79401 79500 11108
68901 69000 9008 74201 74300 10068 79501 79600 11128
69001 69100 9028 74301 74400 10088 79601 79700 11148
69101 69200 9048 74401 74500 10108 79701 79800 11168
69201 69300 9068 74501 74600 10128 79801 79900 11188

79901 80000 11208 85101 85200 12342 90401 90500 13667
80001 80100 11228 85201 85300 12367 90501 90600 13692
80101 80200 11248 85301 85400 12392 90601 90700 13717
80201 80300 11268 85401 85500 12417 90701 90800 13742
80301 80400 11288 85501 85600 12442 90801 90900 13767
80401 80500 11308 85601 85700 12467 90901 91000 13792
80501 80600 11328 85701 85800 12492 91001 91100 13817
80601 80700 11348 85801 85900 12517 91101 91200 13842
80701 80800 11368 85901 86000 12542 91201 91300 13867
80801 80900 11388 86001 86100 12567 91301 91400 13892
80901 81000 11408 86101 86200 12592 91401 91500 13917
81001 81100 11428 86201 86300 12617 91501 91600 13942
81101 81200 11448 86301 86400 12642 91601 91700 13967
81201 81300 11468 86401 86500 12667 91701 91800 13992
81301 81400 11488 86501 86600 12692 91801 91900 14017
81401 81500 11508 86601 86700 12717 91901 92000 14042
81501 81600 11528 86701 86800 12742 92001 92100 14067
81601 81700 11548 86801 86900 12767 92101 92200 14092
81701 81800 11568 86901 87000 12792 92201 92300 14117
81801 81900 11588 87001 87100 12817 92301 92400 14142
81901 82000 11608 87101 87200 12842 92401 92500 14167
82001 82100 11628 87201 87300 12867 92501 92600 14192
82101 82200 11648 87301 87400 12892 92601 92700 14217
82201 82300 11668 87401 87500 12917 92701 92800 14242
82301 82400 11688 87501 87600 12942 92801 92900 14267
82401 82500 11708 87601 87700 12967 92901 93000 14292
82501 82600 11728 87701 87800 12992 93001 93100 14317
82601 82700 11748 87801 87900 13017 93101 93200 14342
82701 82800 11768 87901 88000 13042 93201 93300 14367
82801 82900 11788 88001 88100 13067 93301 93400 14392
82901 83000 11808 88101 88200 13092 93401 93500 14417
83001 83100 11828 88201 88300 13117 93501 93600 14442
83101 83200 11848 88301 88400 13142 93601 93700 14467
83201 83300 11868 88401 88500 13167 93701 93800 14492
83301 83333 11875 88501 88600 13192 93801 93900 14517
83334 83400 11892 88601 88700 13217 93901 94000 14542
83401 83500 11917 88701 88800 13242 94001 94100 14567
83501 83600 11942 88801 88900 13267 94101 94200 14592
83601 83700 11967 88901 89000 13292 94201 94300 14617
83701 83800 11992 89001 89100 13317 94301 94400 14642
83801 83900 12017 89101 89200 13342 94401 94500 14667
83901 84000 12042 89201 89300 13367 94501 94600 14692
84001 84100 12067 89301 89400 13392 94601 94700 14717
84101 84200 12092 89401 89500 13417 94701 94800 14742
84201 84300 12117 89501 89600 13442 94801 94900 14767
84301 84400 12142 89601 89700 13467 94901 95000 14792
84401 84500 12167 89701 89800 13492 95001 95100 14817
84501 84600 12192 89801 89900 13517 95101 95200 14842
84601 84700 12217 89901 90000 13542 95201 95300 14867
84701 84800 12242 90001 90100 13567 95301 95400 14892
84801 84900 12267 90101 90200 13592 95401 95500 14917
84901 85000 12292 90201 90300 13617 95501 95600 14942
85001 85100 12317 90301 90400 13642 95601 95700 14967

95701 95800 14992 101001 101100 16317 106301 106400 17642
95801 95900 15017 101101 101200 16342 106401 106500 17667
95901 96000 15042 101201 101300 16367 106501 106600 17692
96001 96100 15067 101301 101400 16392 106601 106700 17717
96101 96200 15092 101401 101500 16417 106701 106800 17742
96201 96300 15117 101501 101600 16442 106801 106900 17767
96301 96400 15142 101601 101700 16467 106901 107000 17792
96401 96500 15167 101701 101800 16492 107001 107100 17817
96501 96600 15192 101801 101900 16517 107101 107200 17842
96601 96700 15217 101901 102000 16542 107201 107300 17867
96701 96800 15242 102001 102100 16567 107301 107400 17892
96801 96900 15267 102101 102200 16592 107401 107500 17917
96901 97000 15292 102201 102300 16617 107501 107600 17942
97001 97100 15317 102301 102400 16642 107601 107700 17967
97101 97200 15342 102401 102500 16667 107701 107800 17992
97201 97300 15367 102501 102600 16692 107801 107900 18017
97301 97400 15392 102601 102700 16717 107901 108000 18042
97401 97500 15417 102701 102800 16742 108001 108100 18067
97501 97600 15442 102801 102900 16767 108101 108200 18092
97601 97700 15467 102901 103000 16792 108201 108300 18117
97701 97800 15492 103001 103100 16817 108301 108400 18142
97801 97900 15517 103101 103200 16842 108401 108500 18167
97901 98000 15542 103201 103300 16867 108501 108600 18192
98001 98100 15567 103301 103400 16892 108601 108700 18217
98101 98200 15592 103401 103500 16917 108701 108800 18242
98201 98300 15617 103501 103600 16942 108801 108900 18267
98301 98400 15642 103601 103700 16967 108901 109000 18292
98401 98500 15667 103701 103800 16992 109001 109100 18317
98501 98600 15692 103801 103900 17017 109101 109200 18342
98601 98700 15717 103901 104000 17042 109201 109300 18367
98701 98800 15742 104001 104100 17067 109301 109400 18392
98801 98900 15767 104101 104200 17092 109401 109500 18417
98901 99000 15792 104201 104300 17117 109501 109600 18442
99001 99100 15817 104301 104400 17142 109601 109700 18467
99101 99200 15842 104401 104500 17167 109701 109800 18492
99201 99300 15867 104501 104600 17192 109801 109900 18517
99301 99400 15892 104601 104700 17217 109901 110000 18542
99401 99500 15917 104701 104800 17242 110001 110100 18567
99501 99600 15942 104801 104900 17267 110101 110200 18592
99601 99700 15967 104901 105000 17292 110201 110300 18617
99701 99800 15992 105001 105100 17317 110301 110400 18642
99801 99900 16017 105101 105200 17342 110401 110500 18667
99901 100000 16042 105201 105300 17367 110501 110600 18692
100001 100100 16067 105301 105400 17392 110601 110700 18717
100101 100200 16092 105401 105500 17417 110701 110800 18742
100201 100300 16117 105501 105600 17442 110801 110900 18767
100301 100400 16142 105601 105700 17467 110901 111000 18792
100401 100500 16167 105701 105800 17492 111001 111100 18817
100501 100600 16192 105801 105900 17517 111101 111200 18842
100601 100700 16217 105901 106000 17542 111201 111300 18867
100701 100800 16242 106001 106100 17567 111301 111400 18892
100801 100900 16267 106101 106200 17592 111401 111500 18917
100901 101000 16292 106201 106300 17617 111501 111600 18942

111601 111700 18967 116901 117000 20292 122201 122300 21617
111701 111800 18992 117001 117100 20317 122301 122400 21642
111801 111900 19017 117101 117200 20342 122401 122500 21667
111901 112000 19042 117201 117300 20367 122501 122600 21692
112001 112100 19067 117301 117400 20392 122601 122700 21717
112101 112200 19092 117401 117500 20417 122701 122800 21742
112201 112300 19117 117501 117600 20442 122801 122900 21767
112301 112400 19142 117601 117700 20467 122901 123000 21792
112401 112500 19167 117701 117800 20492 123001 123100 21817
112501 112600 19192 117801 117900 20517 123101 123200 21842
112601 112700 19217 117901 118000 20542 123201 123300 21867
112701 112800 19242 118001 118100 20567 123301 123400 21892
112801 112900 19267 118101 118200 20592 123401 123500 21917
112901 113000 19292 118201 118300 20617 123501 123600 21942
113001 113100 19317 118301 118400 20642 123601 123700 21967
113101 113200 19342 118401 118500 20667 123701 123800 21992
113201 113300 19367 118501 118600 20692 123801 123900 22017
113301 113400 19392 118601 118700 20717 123901 124000 22042
113401 113500 19417 118701 118800 20742 124001 124100 22067
113501 113600 19442 118801 118900 20767 124101 124200 22092
113601 113700 19467 118901 119000 20792 124201 124300 22117
113701 113800 19492 119001 119100 20817 124301 124400 22142
113801 113900 19517 119101 119200 20842 124401 124500 22167
113901 114000 19542 119201 119300 20867 124501 124600 22192
114001 114100 19567 119301 119400 20892 124601 124700 22217
114101 114200 19592 119401 119500 20917 124701 124800 22242
114201 114300 19617 119501 119600 20942 124801 124900 22267
114301 114400 19642 119601 119700 20967 124901 125000 22292
114401 114500 19667 119701 119800 20992 125001 125100 22317
114501 114600 19692 119801 119900 21017 125101 125200 22342
114601 114700 19717 119901 120000 21042 125201 125300 22367
114701 114800 19742 120001 120100 21067 125301 125400 22392
114801 114900 19767 120101 120200 21092 125401 125500 22417
114901 115000 19792 120201 120300 21117 125501 125600 22442
115001 115100 19817 120301 120400 21142 125601 125700 22467
115101 115200 19842 120401 120500 21167 125701 125800 22492
115201 115300 19867 120501 120600 21192 125801 125900 22517
115301 115400 19892 120601 120700 21217 125901 126000 22542
115401 115500 19917 120701 120800 21242 126001 126100 22567
115501 115600 19942 120801 120900 21267 126101 126200 22592
115601 115700 19967 120901 121000 21292 126201 126300 22617
115701 115800 19992 121001 121100 21317 126301 126400 22642
115801 115900 20017 121101 121200 21342 126401 126500 22667
115901 116000 20042 121201 121300 21367 126501 126600 22692
116001 116100 20067 121301 121400 21392 126601 126700 22717
116101 116200 20092 121401 121500 21417 126701 126800 22742
116201 116300 20117 121501 121600 21442 126801 126900 22767
116301 116400 20142 121601 121700 21467 126901 127000 22792
116401 116500 20167 121701 121800 21492 127001 127100 22817
116501 116600 20192 121801 121900 21517 127101 127200 22842
116601 116700 20217 121901 122000 21542 127201 127300 22867
116701 116800 20242 122001 122100 21567 127301 127400 22892
116801 116900 20267 122101 122200 21592 127401 127500 22917

127501 127600 22942 132701 132800 24242 137901 138000 25542
127601 127700 22967 132801 132900 24267 138001 138100 25567
127701 127800 22992 132901 133000 24292 138101 138200 25592
127801 127900 23017 133001 133100 24317 138201 138300 25617
127901 128000 23042 133101 133200 24342 138301 138400 25642
128001 128100 23067 133201 133300 24367 138401 138500 25667
128101 128200 23092 133301 133400 24392 138501 138600 25692
128201 128300 23117 133401 133500 24417 138601 138700 25717
128301 128400 23142 133501 133600 24442 138701 138800 25742
128401 128500 23167 133601 133700 24467 138801 138900 25767
128501 128600 23192 133701 133800 24492 138901 139000 25792
128601 128700 23217 133801 133900 24517 139001 139100 25817
128701 128800 23242 133901 134000 24542 139101 139200 25842
128801 128900 23267 134001 134100 24567 139201 139300 25867
128901 129000 23292 134101 134200 24592 139301 139400 25892
129001 129100 23317 134201 134300 24617 139401 139500 25917
129101 129200 23342 134301 134400 24642 139501 139600 25942
129201 129300 23367 134401 134500 24667 139601 139700 25967
129301 129400 23392 134501 134600 24692 139701 139800 25992
129401 129500 23417 134601 134700 24717 139801 139900 26017
129501 129600 23442 134701 134800 24742 139901 140000 26042
129601 129700 23467 134801 134900 24767 140001 140100 26067
129701 129800 23492 134901 135000 24792 140101 140200 26092
129801 129900 23517 135001 135100 24817 140201 140300 26117
129901 130000 23542 135101 135200 24842 140301 140400 26142
130001 130100 23567 135201 135300 24867 140401 140500 26167
130101 130200 23592 135301 135400 24892 140501 140600 26192
130201 130300 23617 135401 135500 24917 140601 140700 26217
130301 130400 23642 135501 135600 24942 140701 140800 26242
130401 130500 23667 135601 135700 24967 140801 140900 26267
130501 130600 23692 135701 135800 24992 140901 141000 26292
130601 130700 23717 135801 135900 25017 141001 141100 26317
130701 130800 23742 135901 136000 25042 141101 141200 26342
130801 130900 23767 136001 136100 25067 141201 141300 26367
130901 131000 23792 136101 136200 25092 141301 141400 26392
131001 131100 23817 136201 136300 25117 141401 141500 26417
131101 131200 23842 136301 136400 25142 141501 141600 26442
131201 131300 23867 136401 136500 25167 141601 141700 26467
131301 131400 23892 136501 136600 25192 141701 141800 26492
131401 131500 23917 136601 136700 25217 141801 141900 26517
131501 131600 23942 136701 136800 25242 141901 142000 26542
131601 131700 23967 136801 136900 25267 142001 142100 26567
131701 131800 23992 136901 137000 25292 142101 142200 26592
131801 131900 24017 137001 137100 25317 142201 142300 26617
131901 132000 24042 137101 137200 25342 142301 142400 26642
132001 132100 24067 137201 137300 25367 142401 142500 26667
132101 132200 24092 137301 137400 25392 142501 142600 26692
132201 132300 24117 137401 137500 25417 142601 142700 26717
132301 132400 24142 137501 137600 25442 142701 142800 26742
132401 132500 24167 137601 137700 25467 142801 142900 26767
132501 132600 24192 137701 137800 25492 142901 143000 26792
132601 132700 24217 137801 137900 25517 143001 143100 26817

143101 143200 26842 148301 148400 28142 153501 153600 29442
143201 143300 26867 148401 148500 28167 153601 153700 29467
143301 143400 26892 148501 148600 28192 153701 153800 29492
143401 143500 26917 148601 148700 28217 153801 153900 29517
143501 143600 26942 148701 148800 28242 153901 154000 29542
143601 143700 26967 148801 148900 28267 154001 154100 29567
143701 143800 26992 148901 149000 28292 154101 154200 29592
143801 143900 27017 149001 149100 28317 154201 154300 29617
143901 144000 27042 149101 149200 28342 154301 154400 29642
144001 144100 27067 149201 149300 28367 154401 154500 29667
144101 144200 27092 149301 149400 28392 154501 154600 29692
144201 144300 27117 149401 149500 28417 154601 154700 29717
144301 144400 27142 149501 149600 28442 154701 154800 29742
144401 144500 27167 149601 149700 28467 154801 154900 29767
144501 144600 27192 149701 149800 28492 154901 155000 29792
144601 144700 27217 149801 149900 28517 155001 155100 29817
144701 144800 27242 149901 150000 28542 155101 155200 29842
144801 144900 27267 150001 150100 28567 155201 155300 29867
144901 145000 27292 150101 150200 28592 155301 155400 29892
145001 145100 27317 150201 150300 28617 155401 155500 29917
145101 145200 27342 150301 150400 28642 155501 155600 29942
145201 145300 27367 150401 150500 28667 155601 155700 29967
145301 145400 27392 150501 150600 28692 155701 155800 29992
145401 145500 27417 150601 150700 28717 155801 155900 30017
145501 145600 27442 150701 150800 28742 155901 156000 30042
145601 145700 27467 150801 150900 28767 156001 156100 30067
145701 145800 27492 150901 151000 28792 156101 156200 30092
145801 145900 27517 151001 151100 28817 156201 156300 30117
145901 146000 27542 151101 151200 28842 156301 156400 30142
146001 146100 27567 151201 151300 28867 156401 156500 30167
146101 146200 27592 151301 151400 28892 156501 156600 30192
146201 146300 27617 151401 151500 28917 156601 156700 30217
146301 146400 27642 151501 151600 28942 156701 156800 30242
146401 146500 27667 151601 151700 28967 156801 156900 30267
146501 146600 27692 151701 151800 28992 156901 157000 30292
146601 146700 27717 151801 151900 29017 157001 157100 30317
146701 146800 27742 151901 152000 29042 157101 157200 30342
146801 146900 27767 152001 152100 29067 157201 157300 30367
146901 147000 27792 152101 152200 29092 157301 157400 30392
147001 147100 27817 152201 152300 29117 157401 157500 30417
147101 147200 27842 152301 152400 29142 157501 157600 30442
147201 147300 27867 152401 152500 29167 157601 157700 30467
147301 147400 27892 152501 152600 29192 157701 157800 30492
147401 147500 27917 152601 152700 29217 157801 157900 30517
147501 147600 27942 152701 152800 29242 157901 158000 30542
147601 147700 27967 152801 152900 29267 158001 158100 30567
147701 147800 27992 152901 153000 29292 158101 158200 30592
147801 147900 28017 153001 153100 29317 158201 158300 30617
147901 148000 28042 153101 153200 29342 158301 158400 30642
148001 148100 28067 153201 153300 29367 158401 158500 30667
148101 148200 28092 153301 153400 29392 158501 158600 30692
148201 148300 28117 153401 153500 29417 158601 158700 30717
How to compute TDS if the monthly salary income (Gross salary minus PF & GIS)
exceeds Nu.158,700
Monthly Salary after subtracting PF and GIS XXXXX

( - ) Subtract 83,333
That gives you XXXXX ( A)
Multiply A by 25%
Equals to XXXXX ( B)
Add to B 11,875 (C)
Monthly TDS to be deducted (B ) + ( C )

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TAX DEDUCTED AT SOURCE

Department of Revenue and Customs

Tax Deducted at Source (3 rd Edition) 3

Tax Deducted at Source (3 rd Edition) 4

1.1 What is TDS?

1.2 What type of income is subject to TDS?

1.3 What are the objectives of TDS?

1.4 Legal Authority

1.6 What are the responsibilities of a withholding Agency?

1.7 What are the responsibilities of a taxpayer?

Tax Deducted at Source (3 rd Edition) 6

● Name of the withholding agency

Tax Deducted at Source (3 rd Edition) 7

2.1 Full Tax Liability

2.1.1 Entities liable for TDS under Full Tax Liability

2.1.2 Incomes liable for TDS under Full Tax Liability

2.1.3 Rate of TDS under Full Tax Liability

Sl. No Income Type TDS Rate

Tax Deducted at Source (3 rd Edition) 8

2.2.1 Entities liable for TDS under Limited Tax Liability

b. Legal entities resident abroad but participating in a business in collaboration or on a

2.2.2 Incomes liable for TDS under Limited Tax Liability

Tax Deducted at Source (3 rd Edition) 9

2.2.3 Rate of TDS under Limited Tax Liability

Sl. No Income Type TDS Rate

2.3 Incomes not liable for TDS

a. Purchases made for retailing purposes by trading units;

Tax Deducted at Source (3 rd Edition) 10

2.4 Companies under Tax Holidays

Tax Deducted at Source (3 rd Edition) 11

3.1 Full Tax Liability

3.1.1 Entities liable for TDS under Full Tax Liability:

3.1.2 Incomes liable for TDS under Full Tax Liability

● Construction Income including sub-contract incomes;

3.1.3 Rate of TDS under Full Tax Liability

Sl. No Income Type TDS Rate

Tax Deducted at Source (3 rd Edition) 12

3.2.1 Entities liable for TDS under Limited Tax Liability

b. Individuals or businesses resident abroad but participating in a business in Bhutan in

3.2.2 Incomes liable for TDS under Limited Tax Liability

a. Income received from sub-letting or sub-contracting business;

Tax Deducted at Source (3 rd Edition) 13

3.2.3 TDS Rate under Limited Tax Liability

Sl. No Income Type TDS Rate

3.3 Income not liable for TDS

Tax Deducted at Source (3 rd Edition) 14

3.4 Business entities under Tax Holidays

5. PERSONAL INCOME TAX

5.1 Persons or Individuals liable for TDS under PIT

e. Bhutanese citizens working in Bhutan for international organizations and donor/externally

5.2 Sources of Income liable for TDS

5.2.1 Income from Salary

c. Exemptions from TDS under Salary Income

c. TDS for Special Category of Income

Tax Deducted at Source (3 rd Edition) 17

a. Definition of Rental Income

5.2.3 Dividend Income

a. Definition of Dividend Income

5.2.5 Income from Other Sources