The Indian taxation structure is very favourable to lower income population than Bhutanese taxation structure. In India upto Personal income of Rs.3 lakhs is tax free. In Bhutan it is only Nu: 2 lakhs. That too courtesy PDP Government.
And in India the tax is only 5% for those with personal income between 3 lakhs to 5 lakhs. In Bhutan it is 15%. Living cost in Bhutan is far higher in Bhutan than in India.
Businesses in Bhutan pay 30% income tax. In India about 96% of business entities pay 25% income tax.
The PDP Government has enhanced tax exemption amount from 1 lakh to 2 lakh ngultrums for PIT purpose. And also had done away with tax on Fixed Deposit though concerned Banks have not been notified by the Finance Ministry through RMA.
The next Bhutanese Government should be able to enhance PIT tax exemption amount upto Nu: 3 lakhs. And also reduce to 5% the tax on personsl income of 3- 5 lakhs ngultrums.
The Government should ensure proper collection of taxes on imported taxable products at the border entry points. Also ensure better royalty collections. And identify individuals and business entities that should be paying taxes. All these three areas of tax avenues need better monitoribg and enfircement. That way even if taxes are lowered for lower income population, the revenue from tax collections will increase by collecting due taxes that must be paid.
Bhutanese authorities have to be more tax friendly towards vast majority of lower income group of population. Presently the rich and business class enjoy tax breaks in numerous ways. And low income salaried employees are taxed comprehensively on their total personal income after allowing for minimum income exemptions.