IMF Consults FBR on Simplified Retailers Scheme to Broaden Tax Net
Mohsin Siddiqui (Chief Reporter)
The International Monetary Fund (IMF) has approached the Federal Board of Revenue (FBR) seeking clarity on the timeline for introducing the simplified retailers scheme, aimed at bringing 3 million shopkeepers into the tax net. The FBR responded that the final decision on unveiling the scheme would rest with the incoming finance minister.
According to top official sources, the retailers scheme is ready for launch and will be announced once the government finalizes its decision and grants approval to proceed. This development was confirmed during a virtual meeting between the IMF team, led by Mission Chief Nathan Porter, and FBR officials held on Thursday night.
The IMF also sought insights into the FBR’s strategy to achieve the targeted tax collection of Rs9,415 billion by June 30, 2024. Additionally, discussions revolved around the FBR’s capability to collect taxes from 3 million retailers. The FBR informed the IMF team about the deployment of 147 district officers nationwide to expand the tax base. However, given the modest strength of officers compared to the task at hand, challenges are anticipated.
Furthermore, the FBR assured the IMF team of meeting the March 2024 tax collection target of Rs879 billion for the current fiscal year. To streamline tax collection processes, the FBR has developed the mobile app “Tajir Dost,” serving as a national business registry for retailers and traders.
Under the proposed scheme, indicative income will be determined based on annual rental value, and shopkeepers will be required to register through the Tajir Dost app. The scheme does not offer concessional tax rates except for early bird and lump sum payment incentives.
The Tajir Dost app features user-friendly functionalities, minimizing data entry and facilitating tax payments. Income tax paid under the scheme will be considered advance tax, adjustable against total income tax payable for FY2024 and subsequent years.
However, the scheme excludes certain entities, such as national or international chain stores and firms with international affiliations operating across provinces. Nonetheless, all other Tier-I retailers are included under the scheme, aligning with sales tax regulations.
In conclusion, the FBR’s efforts to streamline tax processes and incorporate online retailers into the tax net are underway, emphasizing transparency and ease of compliance for shopkeepers.
