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PIT refund increases by Nu 403 million

…34,310 taxpayers benefited from the tax measures

Revision of Personal Income Tax (PIT) ceiling, enhancement of education expense limit and tax exemption on interest on fixed deposit has led to increasing tax filers and decreasing revenue collection.

In 2016, a total of 79,877 individuals filed their PIT returns, which was an increase of 8,318 filers compared with that of 2015.

On the contrary, net revenue from PIT declined from Nu 1.77B in 2015 to Nu 957M in 2016. Of the gross collection of Nu 1.47B, Nu 514.98M was refunded for the income year 2016. Comparing with 2015 figure, PIT refund increased by Nu 403.7M

However, according to the national revenue report, of the total refund made for the 2016 income year, Nu 89.9M pertained to pending refunds for 2014 and 2015. Because of the glitches in RAMIS, some refunds for 2014 and 2015 remained pending, which were resolved and refunded in 2016.

When PIT revision was implemented in 2016, data from 2014 was used to project the implications. It was estimated that the country had to forego Nu 484M because of the revision in PIT slabs, where as actual collection declined by Nu 723M.

The Department of Revenue and Customs (DRC) said that the amount of deduction claimed under education expense could have increased due to increase in number of school-going children or that expenses claimed might have increased.

DRC stated that the rise could also be due to exemption of interest income from fixed deposit. Tax collected on interest income from fixed deposit in 2015 was 13.66M, which involved 1,331 taxpayers. This was the foregone in 2016.

It is also believed that the actual number of PIT payers with net income below Nu 200,000 must have increased compared to the projected figures.

National revenue report stated that the number of PIT filers should have reduced in 2016 with revision to basic exemption limit. Instead, it increased since many filed their PIT to claim refund.

The tax deducted at source (TDS) for the first seven months in 2016 were as per the previous rates, while the actual tax computation for 2016 was done based on the revised structure.

This is because the Parliament during the 7th session approved the revision in July 2016 and it was applied in retrospect from January 1. However, the revised TDS was implemented starting August 1.

Hence, many PIT filers claimed Refund.

From the Total 79,877 PIT filers, 34,310 had net income below Nu 200,000 but had filed returns in order to claim refund. This means 34,310 individuals benefited from the revision.

For the last income year (2017), the department does not expect individuals with income below Nu 200,000 to file tax returns as monthly tax deduction is corrected.

Basic exemption limit was brought to Nu 200,000 of annual income from Nu 100,000.

PIT contributed 3.2 percent to the national revenue.

Meanwhile, the country’s net national revenue from both tax and non-tax collection in the fiscal year 2016-17 was Nu 29.71B, which represents 18.7 percent of GDP. The net revenue fully financed recurrent expenditure and 21.62 percent of the capital expenditure. Compared with the previous fiscal year, net revenue increased by 6 percent.

Tshering Dorji

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