Agency: He said the Income Tax Act of Bhutan 2025 proposes to levy a 10% tax on interest earned through fixed deposit. The tax is on interest income only, not on the Fixed Deposit principal. It is drawn on the principles of equity, investment neutrality, social justice and fiscal sustainability. The objective of the proposal is to ensure that all forms of income – whether from employment, business or capital— are treated fairly, without unduly distorting savings behavior or investment decisions.
Some information on the current FD holders
He said there are currently some 12,933 FD holders with a principal amount of 18.558 billion (bn) taking home an interest income of 1.459 bn a year. Levying 10% final withholding tax would generate a modest revenue of Nu.145 million (mn) yearly.
382 Fixed Deposit holders own 10 mn or more fixed deposits and these are majority holders of 18.558 bn: the next is 474 FD holders owning 5 mn or more but less than 10 mn; the next 3,310 FD holders own 1 mn or more but less than 5 mn; the next 9,152 FD holders own 0.1 mn or more but less than 1 mn; and the next 3,089 FD holders own less than 1 lakh fixed deposits.
Lyonpo said the 10% tax is only on fixed Deposits, and no taxes on Recurring Deposits or Saving accounts. Savings accounts in five commercial banks account for a min of 23% to 49% while the Fixed Deposit accounts is from 32% to 69%.
According to a source, who requested for anonymity, the 382 accounts own Nu 6.331 bn of the fixed deposits and 474 accounts own Nu 2.998 bn of the fixed deposits. This means that a total of 856 accounts own Nu 9.329 bn of the fixed deposits which is around half of the total fixed deposits. This means these 856 accounts are drawing an annual fixed deposit tax free income of Nu 700 mn plus.
The same source said there are seven fixed deposits of Nu 100 mn plus each and one fixed deposit holder has well above Nu 300 mn in fixed deposits.