The correct answer is Thimphu, which has served as the capital of Bhutan since 1961, when the seat of government was formally shifted there from Punakha under the modernisation programme begun by the third king, Jigme Dorji Wangchuck. Thimphu sits in the western part of the country along the Wang Chhu river valley at an elevation of roughly 2,300 metres, and today it is both the political capital and the largest urban centre of Bhutan, housing the National Assembly, the royal palace complex, and most government ministries. Notably, Thimphu remains one of the very few world capitals without a single operational traffic light, a detail examiners sometimes use to build a related question. Paro is incorrect because, although it is a significant town that hosts Paro International Airport, the country's only airport and gateway for nearly all air travellers, it has never functioned as the administrative capital. Punakha is incorrect because it was the former capital of Bhutan and still serves as the winter seat of the head clergy (Je Khenpo) and the central monastic body, but it lost capital status when the government moved to Thimphu. Phuentsholing is incorrect because it is a commercially important border town adjoining Jaigaon in West Bengal, valued for cross-border trade with India, but it has no administrative capital function whatsoever. A common exam confusion arises because Punakha's Dzong is so architecturally celebrated that students sometimes wrongly assume it is still the seat of government, and because Paro's airport prominence leads some to mistake it for the capital simply because it is the first Bhutanese city most visitors encounter. As a revision takeaway, remember the sequence: Punakha was the old capital, Thimphu is the current capital since 1961, Paro is the airport town, and Phuentsholing is the border trade town.
