Without money you cannot imagine your tour. While travel in Bhutan, rather than carry huge amount of cash you can pay by your Credit and Debit Card in most of the city and some hotels. But while you travel in country side or Himalaya, you need Bhutanese money Ngultrum (Nu) to pay bill, for this you can withdraw money from ATM machine or Bank. Credit cards are accepted in some hotels and souvenir shops, but only in major cities or well-touristic areas.
The unit of Bhutan currency is called Ngultrum (Nu), which is pegged to the Indian rupee. The ngultrum is further divided into 100 Chetrum. There are coins to the value of 25 and 50 Chetrum and Nu 1, and notes of Nu 1, 5, 10, 20, 50, 100, 500 and 1000. The Nu 1 coin depicts the eight auspicious symbols called Tashi Tagye, while each note depicts a different Dzong.
You do not need to surprised, people return back you Indian rupees, it is used freely anywhere in Bhutan. Except 500 and 1000 Indian rupee notes, others small Indian notes are officially accepted. If you are traveling from India to Bhutan trip, you do not need to exchange in Bhutanese currency, but you can bring just certain amount. Bhutanese money Ngultrums cannot be used in India.
