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With the Goods and Services Tax (GST) set to take effect from January 1, 2026, Bhutan is introducing a significant tax relief measure designed to support individuals and families living with disabilities. The Department of Revenue and Customs (DRC) under the Ministry of Finance has announced that resident individuals with disabilities will be eligible to claim a deduction of Nu 40,000 from their total gross adjusted income. This landmark provision marks an important step toward inclusive fiscal policy, aiming to ease the additional financial pressures that persons with disabilities often face — including medical expenses, assistive devices, rehabilitation costs, and specialized care. The DRC has clarified that the deduction extends beyond the individual taxpayer; it can also be claimed by those who have a spouse, parent, or child certified by the Ministry of Health as living with a physical or mental disability. This inclusive framework recognizes the critical role families play in caring for persons with disabilities and seeks to provide financial recognition and relief for their efforts. It reflects the government’s continued commitment to social equity and economic inclusion, ensuring that Bhutan’s tax system remains responsive to the diverse needs of its citizens. A Progressive Step in Bhutan’s Tax System According to the DRC, this new provision doubles the previous income tax deduction of Nu 20,000 that had been available for educational expenses. The Nu 40,000 flat deduction is designed as a disability relief allowance, offering taxpayers a meaningful way to offset the high cost of living with or caring for a disability. Taxpayers may also claim both educational expense deductions and disability relief simultaneously if their child is disabled and attending school, creating a layered support mechanism that helps families manage multiple financial responsibilities. “This provision is not just about reducing tax liabilities — it’s about empowering families and promoting social responsibility,” said Tashi Wangmo from the Income Tax Division, DRC. “By providing targeted relief, we hope to make life a little easier for individuals and caregivers who already face daily challenges. The goal is to encourage greater participation of persons with disabilities in the economy and ensure that no one is left behind.” Rising Disability Rates in Bhutan The introduction of this tax relief comes at a time when disability prevalence in Bhutan has seen a marked increase. According to the National Health Survey 2023, there are now approximately 48,000 persons with disabilities in the country — representing nearly 7 percent of the total population. This marks a sharp rise from the 2.1 percent reported in the 2017 Population and Housing Census of Bhutan (PHCB). The 2023 survey, conducted using the Washington Group Short Set on Functioning (WG-SS), assessed six key domains of disability — vision, hearing, mobility, communication, self-care, and cognition — among individuals aged five years and above. The findings reveal distinct demographic patterns: vision, mobility, and cognitive impairments are slightly more common among women; hearing, communication, and self-care disabilities occur more frequently among men and the prevalence of disability increases sharply with age, especially among those aged 60 and above. Rural–Urban and Income Disparities Disability prevalence is also influenced by geography and income. Rural areas show significantly higher rates of disability, with 8.6 percent of the rural population affected compared to 4.0 percent in urban areas. Vision-related disabilities (2.2%) and hearing impairments (2.8%) are particularly common in rural Bhutan, where access to healthcare and assistive services remains limited. The district of Wangduephodrang recorded the highest overall disability rate at 12 percent. Disability prevalence also tends to increase among lower-income households, with the lowest income quintile showing an 11.2 percent disability rate — highlighting the strong link between disability, poverty, and reduced access to opportunities. A Policy Grounded in Global Standards Bhutan’s approach to disability inclusion is guided by the National Policy for Persons with Disabilities (2019), which aligns with the UN Convention on the Rights of Persons with Disabilities (CRPD). The policy defines persons with disabilities as individuals with long-term physical, mental, intellectual, or sensory impairments that, in interaction with various barriers, may hinder their full and effective participation in society. The new GST provision, therefore, complements Bhutan’s ongoing efforts to create a more inclusive economy and strengthen the Trust Economy — one based on fairness, compassion, and shared responsibility. Toward an Inclusive and Equitable Future Beyond its fiscal implications, the GST disability deduction represents a powerful social statement — that Bhutan values inclusivity not as charity, but as a right and a pillar of national development. By reducing financial barriers and encouraging economic participation, the measure is expected to improve the quality of life for thousands of Bhutanese while promoting a stronger sense of belonging and dignity. The policy also serves as a model for integrating social welfare within fiscal reform, balancing economic modernization with human-centered policies. As Bhutan transitions to the GST system, such inclusive measures will help ensure that growth is both equitable and sustainable. Ultimately, this initiative demonstrates that inclusive economic growth — one that lifts every citizen regardless of ability — remains central to Bhutan’s pursuit of Gross National Happiness. Through thoughtful policies like this, Bhutan continues to reaffirm that progress is most meaningful when it reaches everyone. Sangay Rabten From Thimphu
