In the Third Reading of the Goods and Services Tax (Amendment) Bill of Bhutan 2025 held today, the Member from South Thimphu constituency, member of the Economic and Finance Committee, presented the Committee’s review report on the Bill.

The Member informed the House that the Bill seeks to realign the tax framework with its core principles of simplicity, efficiency, and neutrality by addressing structural flaws in exemptions, excise integration, and administrative processes. The Committee reviewed the Bill and consulted the relevant stakeholders and the amendments proposed by the Committee are aimed to streamline the GST framework by minimizing exemptions and reducing the list of taxable goods. These changes are expected to improve tax efficiency, reduce the compliance burden, and facilitate the effective implementation of GST from 1st January 2026.

During the deliberation the following proposals were made and endorsed by the House:

• Under Section 231 of Chapter 25, Part III, Members proposed the inclusion of two Bhutan Chamber of Commerce and Industry (BCCI) representatives in the composition of the Review Board for the purpose of hearing appeals.

• A clause Immunity for witnesses under the new Section “IMMUNITY” following Section 237 of Chapter 25, Part III

• It was also pointed out that the authority of the Review Board should be clearly specified.

• With regard to Section 238 of Chapter 25, Part III, concerning appeals against the decisions of the Review Board, the House endorsed amending the provision from “appeal to the High Court” to “appeal to Royal Court of Justice.” This was aligned, in continuation of the status quo of having a Review Board as a dispute resolution system for tax matters. In absence of a Taxation Review Tribunal, a quasi judicial body, which the 2020 Act had specified which otherwise allowed appeal directly to the High Court.

• In Schedule I of the GST rate, the House endorsed the amendment proposed by the Committee which stipulates that “other than the zero rate prescribed in schedule V, the applicable GST rate on taxable supplies and taxable import of goods and services shall be 5%,” which was a reduction from 7% proposed by the government to 5%”, with tax on electricity to be retained while the subsidy on the 100 units of free electricity in the rural areas remain unaffected. Moreover, tax exemption will apply on three essential food items (rice, cooking oil and salt), sanitary pads and electronic wheelchairs for Persons with Disabilities. 

The Committee was directed to make the necessary changes as per the decisions of the House in the BTC code and commodity description. The House will vote on the Bill on 16 June 2025 as per the rules of procedure.