House owners must issue rental receipts to tenants: DRC

House owners must issue rental receipts to tenants: DRC

The Department of Revenue and Customs (DRC) has notified house owners to issue rental receipts to tenants on a monthly basis.

This is the second time that DRC is issuing such a notification.The first notification was issued in 2012 and the most recent one in the first week of August.

The media and communication specialist at DRC, Kaysang W Samdup said the notification is a reminder to house owners and new house owners since over the years many new constructions have mushroomed.

The notification states that all the land and building owners must issue proper receipts to the tenants on monthly basis against the lease or rental income received. The receipts are required not only for tax purpose but also to facilitate the property owners in accounting the lease or rental income accurately at time of filling.

The notification states that the receipt should be serially numbered, have name of property owner, thram number or plot and location of the property generation rental income, name of the tenant and monthly rental amount, month for which the rent is collected and name and signature of the person issuing the receipt.

The receipt should be printed in duplicate copies. The original copy should be issued to the tenant and duplicate copy must be retained by the building owner for future verification purpose or submission to the RRCO if demanded.

It also mentioned that property remaining vacant should be informed in writing within 15 days to RRCO concerned.

Kaysang W Samdup said that the receipt will protect both the parties at the point of filing the tax, if there is need of assessment.

“When there is rental dispute between the tenant and house owners, the receipt will serve as proof,” said Kasang W Samdup.

She also said that this will ensure that house owners are speaking the truth when claiming that their flat is empty even it is occupied.

Civil servants get house rent allowance and even corporate employees.

Many private employees feel that in the context of high house rents, private sector employees should receive tax rebates, say 15% on the house rents.

One of the private employees said that if there is some kind of tax rebates, this would serve as an incentive to ensure house owners issue receipts. This will help in revenue collection and prevent tax evasion and at the same time benefit tenants. 

If the rental income is more than Nu 200,000 a year, rental tax should be paid.

For the rental tax, only the interest part of loan is adjusted. The tax will be deducted if there is insurance, maintenance of property and land tax. If Tax is Deducted at Source (TDS), it will be adjusted with final tax and house owners may get refund.

However, currently, the Tax Deducted at Source (TDS) on the rental payments for residences is not made. This could lead to possible manipulation of rental incomes by house owners during the tax payment, resulting in loss of revenue for the government.

The department also established a tax payer center where the tax payers can call and ask questions related to taxes.

Dechen Dolkar from Thimphu