Lockdown and filing your PIT, BIT and CIT taxes

The second National Lockdown came right towards the end of the year when people either calculate the tax payable or pay them. The second lockdown also left behind an economic and revenue impact for many businesses which would impact their taxes.

Finance Minister Namgay Tshering, said, “The Majority of the businesses are affected by the pandemic and as a result their sales turnover would also reduce and thereby the amount of the income tax payable would also decrease proportionately as taxes are paid on the net profit of the businesses. If businesses have incurred loss they would not be liable for any income tax.”

Lyonpo also said that the Corporate Income Tax (CIT) Rate on the private and non-state Companies has been revised to 25% on the net profit during the 3rd Session of the Third Parliament, this would benefit around 385 Companies for Income Year 2020 as they would be paying 5% less taxes compared to the previous income year.

Under the Personal Income Tax (PIT), Lyonpo said that the government recently enhanced basic exemption limit to Nu. 300,000 from Nu 200,000 and this is expected to benefit around some 30,000 taxpayers as they would not be paying PIT. Further, the government also exempted income tax from cash crop and this will benefit around 150 farmers.

With regard to small and micro businesses, “The department is in the process of developing the BIT estimated Tax App (BETA). The app has been developed with objective of reducing personal interaction during this pandemic situation and also to do away with conventional method of collecting taxes by physically visiting shops,” he added.

The app will be used by small and micro businesses and the app is in the final stage of testing and is expected to be launched soon.

Meanwhile, Regional Director of Regional Revenue and Customs Office (RRCO), Thimphu said that through electronic mails or phones, the officials are continuously providing taxpayers’ services since lock down and around 150 Tax clearance certificates for Tender Participation and renewal of trade licenses were provided online.

He said, “13 officials from our office have been identified to handle online filing of the PIT since 1st of January, 2021 and till date, 1,692 taxpayers have filed PIT with RRCO and over 80% of PIT Returns have completed assessment.”

He clarified that Bhutanese or residents have to still file PIT to claim refund of taxes if taxes through Tax Deduction at Source were applied on their Income (PIT) by withholding agencies even if the net income of the person is less than Nu. 300,000 in a year.

He said that providing Taxpayers’ services is one of the core mandates of the department and therefore, all the Regional Offices are trying their best to provide the needed services through online systems within their capacity. “We are also being honest with taxpayers with regard to our limitations due to the current unprecedented situation,” he added. 

RRCO urged and encouraged taxpayers to file PIT, BIT, CIT and other taxes online through Revenue Administration and Management Information System (RAMIS) rather than visiting RRCO to file it.

They office also encouraged taxpayers to make online payment through various mobile banking apps.

He said, “This will help us maintain COVID_19 safety protocols. We can be reached over emails and phones to help taxpayers at any time should there be problems. Email ids and phone numbers of officials can be found in the DRC website.”

The tax filing period for Income Year 2020 has just begun whereby the BIT and CIT filing due date is from 1st January to 31st March 2021 and PIT is from 1 January to 28 February 2021.

With the introduction of online tax system RAMIS, taxpayers can file their taxes online from any part of the world. However, extension would depend on the review and situation.

The time extensions for filing BIT/PIT/CIT is a policy matter, and therefore, the Ministry and the DRC Head quarter will decide on this depending on the situations, he said. However, he said, “If tax filing dates for BIT/PIT/CIT are extended due to future lockdowns, fines for late filings would be exempted along with that.”

All small and micro business units located in rural areas are already exempted form paying taxes till December 2024. Further, under the Fiscal Incentives Act 2017, businesses under various sectors can apply for tax exemption.

In addition, Cottage and Small Industries, Tourism Sector, Education and Health Sector, Agriculture and RNR sector, ICT and Waste Management, and so on are eligible to apply for exemption.

However, the exemption is granted upon on the fulfillment of the conditions laid down in the Rules on Fiscal Incentives Act 2017.

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