GST collection much below target as of 11th March

The internal target of the Ministry of Finance (MoF) for the Goods and Services Tax (GST) collection is Nu 6.8 billion (bn) for six months from January to June 2026 with an average monthly target of Nu 1.133 bn.

However, as of 11th March 2026, the total GST collection which includes GST collection for January, February and till 11th March is only Nu 1.552 bn of which Nu 1.314 bn is GST on imports charged at entry points like Phuentsholing, Gelephu, etc., Nu 229.5 million (mn) from domestic sources and Nu 9.16 mn from government services.

The last date of filing for GST for January expired by 4th March 2026, but an informal extension has been given as people are still being encouraged to file without the fines.

As of the latest available data, Nu 608 mn was filed for January, with around 87 percent of registered filers having submitted their returns by 6th  March 2011.

This is well below the average monthly GST collection of target of Nu 1.133 bn with a shortfall of around Nu 400 mn below the target.

Last time around, the GST collected as of 2nd March 2026 was Nu 1.189 bn with 78.14 percent filing for January, but it also included import GST collected for February and two days of March.

One could make the argument that while the GST filing deadline for February is 30th March 2026, and figures may improve for February, as more people file, but what must be considered is that the vast majority of the February GST collection is already done at the entry points for imports. The remaining amount would be domestic filers who would push up the amount but not significantly.

The Nu 1.552 bn GST also involves the GST on imports for the first 11 days of March 2026. 

At the current rate, it looks like the Nu 6.8 bn GST target for January to June 2026 may not be achieved, and it also puts into question the Nu 14 bn GST target for 2026-27 financial year.

In comparison, the Sales Tax collected for 2024-2025 financial year was Nu 9.603 bn considering that Sales Tax was not imposed on most services and many basic food items, as it is now for GST. 

If the GST collection for January is taken as the average, then it would be even below the old Sales Tax.

The below target collection so far also begs the question of whether it reflects the weakened nature of the economy still recovering from the post-pandemic period, further strained  by significant outward migration.

However, an official said that January and February are normally slow months for such taxes and things should pick up from March, April and May onwards when there is more economic activity and imports.

The official said he is hopeful that they will meet the GST target, but there is also every chance that the GST target for the 6 months may not be met.

The official said that collection could also go up as many businesses have made mistakes while filing GST online allowing them to claim higher deductions and even refunds than what they are eligible too.

He pointed out that one place where those filing can reduce their GST burden is by showing the GST they already paid to other GST registered entities while buying from them, but he said quite a few businesses have even included non-GST registered business purchases.

Another frequent mistake especially by shops is that in the sales section instead of excluding the essential items like rice, oil, salt, pads and wheelchair which are GST exempt they have included them, but this would increase their GST payable burden and so a correction here would actually reduce GST.

The official said there are still some GST eligible businesses who are yet to register and the Department of Revenue and Customs (DRC) is giving them a chance to register voluntarily, but later there will a Nu 10,000 penalty, and if they still don’t register the penalty could be between Nuy 50,000 to Nu 1 mn. Once these business outlets register then GST is expected to pick up too according to the official.

While the main aim of GST is tax transparency and reform, it was also expected to generate more revenue than Sales Tax, but if GST is unable to meet its revenue target, then that aim is hampered and people may start asking if all the hassle and pain has been worth it.

The GST collection could offer a clear picture of the true state of a weakened economy. 

Another query is whether weak GST collection might prompt stronger tax enforcement of other taxes, such as Business Income Tax, Corporate Income Tax, Personal Income Tax, etc.

Only the coming months of GST collection reports will answer the above queries.