Is Indian currency accepted in Bhutan? What is the exchange rate ?

Although Bhutanese currency Ngultrum is pegged to Indian Rupees, in recent times, the value may not necessarily be the same. Due to excessive import and less export to India, there is a rupee crunch in Bhutan. Especially in the towns bordering Bhutan, when someone need Indian currency, one pays around 5% more Bhutanese Ngultrum to exchange into same Indian currency.

Indian currencies are accepted and is a legal tender in Bhutan.
Indian currencies are exchanged at Par or used at the same value.
Indian notes of Rs. 500 & Rs. 1000 are not accepted officially, as they suspect counterfeit notes. However all other lower value notes are accepted freely.