Course Catalogue

Module Code and Title:   BLT203 Taxation Law and Practice

Programme:                          Bachelor of Commerce

Credit:                                    12

Module Tutors:                     Tika Ram Sharma, Arindam Ghosh, 

Module Coordinator             Tika Ram Sharma

General objective: The module aims to introduce students to the taxation systems in Bhutan including different taxation laws applied in Bhutan. With the introduction to various concepts like Personal Income Tax and Corporate & Business Income Tax, students will develop the competence in tax computation and manual & electronic tax filing at both the personal and business enterprise level. Lastly the unit on indirect taxation in Bhutan will give students a basic understanding on planning, computation and the significance of indirect taxes to the overall economic growth and development of the economy. 

 

Learning outcomes – On completion of the module, students will be able to:

  1. Explain the taxation systems in Bhutan. 
  2. Explain different concepts of taxation law applied in Bhutan
  3. Explain the administrative set up of income tax division specifically its authorities, powers, duties and function
  4. Identify various items of income which are subject to specific and general tax deductions
  5. Distinguish between manual and electronic filing of tax returns
  6. Use RAMIS (Revenue Administration and Management information System for tax filing and tax administration.
  7. Apply various provisions of Income Tax Act of Bhutan to compute the taxable income and tax liability of individual, corporate and business taxpayers.
  8. Analyse the significance & calculation of indirect taxes namely the sales tax, customs & excise duty
  9. Apply the concepts of tax planning in direct and indirect taxation in Bhutan.
  10. Examine the provisions of tax assessments, audits, fines, penalties and settlement of tax disputes and appeals.
  11. Apply the basic concepts of international taxation in relevant situations in Bhutan.

 

Teaching and Learning Approach:

 

Approach

Hours per week

Total credit hours

Lecture 

2

30

Class discussions, tax problem solving, planning exercises, quizzes

1

15

Group discussion, case discussion, project and presentation

1

15 

Independent study, written assignments, case studies

2

60

Total

120

 

Assessment Approach:

  1. Quizzes: Portion of Final Mark: 10%

The two quizzes (5% each, covering approximately 3 weeks of material, of 30 min duration) will have questions based on the basic fundamentals of taxation. Each student will answer 10 objective type questions on (each quiz) on basic concepts of taxation, problem identification, understanding and definitions.   

  1. Case Study: Portion of Final Marks: 15%

Each student will complete two short business situation based case on corporate tax and personal tax planning, based on calculation and analysis of taxability under corporate & personal income tax. Each case study worth 7.5 % will be assessed on following criteria:

2.5%    accurate assessment of the relevant corporate income tax, its computation and analysis

2.5%    how effectively the factors of tax planning are used to analyse the problem 

2.5%    deriving suitable conclusion for the problem given

  1. Class Participation and Preparedness: Portion of Final Mark: 5%

Each student will be assessed based on their participation and preparedness in the class by contributing to the class discussions by answering questions, stating their opinions, listening to others and solving in class exercises during the sessions.

  1. Project and Presentation: Portion of Final Marks:  15% 

(10% for the project & 5% for presentation of the project)

The project shall be a small group project (groups of 4).  The paper of 1500 words includes rationale, data, economic analysis, conclusions and references. The group presentation will be approximately 20 minutes using power point presentations and explanation, including Q&A. 

2%       description of the problem and related tax issues and rationale

5%       using appropriate analysis techniques

2%       quality of the writing (language, organization, referencing)

4%       presenting the project to the class (English fluency, understanding of the subject, body language, class Q&A) – individually assessed

2%       Individually assessed process score based on contribution to group output

  1. Midterm Examination: Portion of Final Mark: 20%

Students will take a written exam of 2 hours duration covering topics up to the mid-point of the semester.

  1. Semester-End Examination: Portion of Final Marks: 35%

The module will have a semester-end exam for 2 hours covering the entire syllabus. The question will be divided into two parts – Part A (carrying 40% of the exam weightage) will be mostly of short answer including objective questions. Part-B (carrying almost 60% of the exam weightage) will be mostly of essay type or an extended response to the given question. This part of the question requires students to apply, analyse, and evaluate or construct knowledge and skills. Cases will also be used to test the levels of knowledge.

 

Areas of assignments

Quantity

Weighting
  1. Quizzes

2

10%
  1. Case study

2

15%
  1. Project and presentation

1

15%
  1. Class Participation and Preparedness

 

  5%
  1. Midterm Examination

 

20%

Total Continuous Assessment (CA)

 

65%

Semester-End Examination (SE)

 

35%

 

 

Pre-Requisites: BLT101 Legal Considerations in Business 

 

Subject Matter: 

1. Introduction                                                                                               

  1. Introduction to taxation
    1. Meaning of tax
    2. Features of tax
    3. Objectives of tax
    4. Characteristics of a Good Taxation System
    5. Element of Tax – tax base, tax rate and taxpayer
  2. Constitutional basis of power of taxation 
  3. Basic Concept of Taxation
    1. Income year
    2. Assessment and assessment year
    3. Types of taxes including green tax and telecom tax
    4. Residential status
    5. Taxable incomes
    6. Deductible incomes
  4.  Historical Development of Bhutanese Taxation System
  5.  Income Tax Law and Rules
    1. Extent
    2. Application 
    3. Definitions.

 

2. Personal Income Tax                                                                               

  1. Introduction and Basic Concepts 
    1. Meaning of PIT
    2. Tax rates
    3. Persons liable to PIT
    4. Taxation of minors
  2. Residence of individual
    1. Income subject to PIT
    2. Total adjusted gross income
  3. Computation of Income from
    1. Salaries
    2. Rental properties
    3. Dividend
    4. Fixed deposits
    5. Cash crops and other sources
    6. Total income
    7. Specific deductions and exemptions
  4. General deductions
    1. Net taxable income
    2. Tax liability of individuals
  5. Set off and carry forward of losses
  6. Preparation of Tax Returns – manually and electronically (using RAMIS system). 

 

  1. Corporate and Business Income Tax                                                  
    1. Introduction to Corporate/Business Income Tax
      1. Meaning of corporations/business for taxation
      2. Tax liability of corporations/business
      3. Accounting treatment and taxable incomes 
    2. Deductions 
      1. Allowable deductions
      2. Non  allowable/depreciation deductions
    3. Treatment of revenue and capital grants
    4. Treatment of subsidies as income under the provision of BAS
    5. Computation of corporate income tax and business income tax
    6. Business under same ownership
    7. Carry forward and Off-set of Losses
    8. Valuation of Stock-in-Trade
    9. Registration and filing of CIT/BIT
    10. Filling of Tax Returns –manually and electronically (using RAMIS system) 
    11. Tax planning for companies/business including multinational companies.

 

4. Tax Administration                                                                                   

  1. Administrative set up of Income Tax Division
    1. Authorities
    2. Powers
    3. Duties and functions
  2. Tax Deducted at Source
  3.  Types of Assessment
    1. Collection
    2. Audits
    3. Recovery Measures
  4.  Fines and Penalties
  5.  Settlement of Disputes and Appeals
    1. Appeal committee and Board
    2. Appeal procedures.

 

5.  Bhutan Sales Tax, Customs and Excise Duty                                     

  1. Bhutan Sales Tax
  2. Introduction to Bhutan sales tax
    1. BST at the point of entry and point of sale
    2. Exemption from Indian sales tax
  3. BST exemption on raw materials and P&M
    1. Tax refunds
    2. Administrative provisions;
  4.  Customs
    1. Introduction
    2. Procedures and practices
    3. Administrative provisions.
  5. Excise Duty
    1. Introduction
    2. Procedures and practices
    3. Administrative provisions.

 

6. Basic Concepts of International Taxation 

  1. Residency rules; Source of income
  2. Tax Havens
  3. Unilateral relief and double taxation avoidance agreements
    1. Controlled Foreign Corporation and Transfer Pricing
      1. Concepts
      2. Meaning of international transactions 
        1. Computation of arm’s length price & methods

 

Reading List:

  1. Essential Reading:
    1. The Course Pack  (Gaeddu College of Business Studies - updated)/ RTC Course Pack
    2. The Income Tax Act of the Kingdom of Bhutan 2001 (as amended) 
    3. The Income Tax Act 2014. 
      1. The Rules on the Income Tax Act of the Kingdom of Bhutan, 2001 (latest ed.), DRC, Ministry of Finance, Royal Government of Bhutan
      2.  Fiscal Incentives: Department of Revenue and Customs (DRC), Royal Government of Bhutan.

 

  1. Additional Reading:
    1. Ahuja, G. & Ravi, G. (2015). Simplified Approach to Corporate Tax Planning and Management, Delhi, Bharat Law House.
    2. Kamal, G. (2016). Guide to International Taxation, Bharat Publication, India.
    3. Rohit, G. (2015). Principles of International Tax Planning, Taxman’s Publication, Delhi India, (2015 Ed.) 
    4. Singhania, V.K & Singhania, M. (n.d.). Students Guide to Income Tax (latest assessment year edition).
    5. Website: www.drc.gov.bt

Date: July, 2017
Royal Thimphu College