The Federal Board of Revenue (FBR) is considering slapping a fixed tax between Rs1,000-Rs5,000 per month on 3.6 million retailers across the country based on their shop size.
The publication reported that the tax collection authority has worked out a plan under which they would abandon tax collection from small traders and shopkeepers via electricity bills and instead would go for fresh fixed schemes for both urban and rural areas.
Under the proposed scheme, it is under consideration to slap Rs1,000 on shop size of 100 square feet, Rs3,000 on shop size of 200 to 300 square feet and Rs5,000 on 500 square feet in urban areas. For rural areas outside the jurisdiction of municipal committees, the proposal is to slap a fixed rate of Rs1,000 on each shop.
Under the scheme, the FBR is proposing to allow the retailers to incorporate the paid tax in the next year’s return filing. There will be a one-page form to avail of this fixed scheme.
When media approached FBR Chairman Amjad Zubair Tiwana to seek his comments on the proposed fixed scheme, he replied, “No proposal has been finalised as yet. Once the proposal is finalised by the FBR, only then will it be shared with the finance minister.”
However, if the plan gets the greenlight, then the caretaker government would not require any new law via a promulgation of an ordinance or wait for the new assemblies to enact amendments to impose a fresh fixed tax scheme for retailers.
This is because, under the existing law approved by parliament, the FBR possesses the power to introduce a scheme for retailers.
It is unclear whether the caretaker government would be able to withstand the pressure of shopkeepers when it imposes the tax or abandons the implementation of plans to bring all sectors into the tax net.
Previous attempts to bring the retailers under the tax net have failed. Last time when the former finance minister Miftah Ismail introduced a policy to increase tax collection through electricity bills, they faced a massive backlash and ultimately had to withdraw following Maryam Nawaz’s demand to address traders’ concern.
