Mohsin Siddiqui (Chief Reporter)
The Federal Board of Revenue (FBR) is preparing to issue a notification to impose a tax on shopkeepers and retailers. However, Muhammad Naeem Mir, the chief coordinator of the Tajir Dost Scheme, has proposed an alternative documentation plan aimed at avoiding agitation and strikes among the trading community.
The FBR is in the final stages of drafting a Statutory Regulatory Order (SRO) to impose a tax on small shopkeepers and retail outlets. This new tax plan has sparked concern among retailers, who fear that it could lead to complications and confusion across markets. The proposed system would require shopkeepers to determine their taxes based on the valuation of their commercial properties, which could lead to disputes and administrative burdens.
The trading community, represented by the Tajir Dost Scheme, has voiced concerns that the proposed tax system is impracticable and unjustified. They argue that calculating taxes based on commercial property valuations is not a feasible approach and could result in unnecessary disputes between the FBR and traders. The Finance Act 2024 has already imposed a 2.5 percent advance income tax on unregistered retailers, a move that shopkeepers believe will further increase the prices of essential commodities.
In a bid to resolve these issues, Muhammad Naeem Mir has presented an alternative plan. This plan focuses on the registration and return filing of non-filer shopkeepers. According to Mir, the alternative plan could register 3.2 million retailers without causing agitation or strikes.
The FBR should immediately issue the agreed income tax return form in Urdu for Tier-II retail outlets. The Urdu form is ready and needs immediate notification by the FBR. Each shopkeeper and retailer would pay a fixed registration fee of Rs1,200 to become a filer. This nominal fee is expected to encourage more retailers to register without feeling financially burdened. Retailers and shopkeepers would be charged a 1.5 percent turnover tax based on the turnover declared in their annual income tax return form. The turnover should be determined on a self-assessment basis, making it simpler and more transparent. Tier-II category retailers would use a simplified return form to file their taxes.
This form is designed to reduce the complexity of the tax filing process and encourage compliance. Newly-registered shopkeepers would not have the facility of tax credit. This measure is aimed at ensuring that the tax collection process remains straightforward and fair.
By simplifying the tax filing process and making it more accessible, the plan aims to avoid the agitation and strikes that could arise from the proposed FBR tax system. The fixed registration fee and simplified return form are designed to encourage more shopkeepers and retailers to become filers. The self-assessment method for turnover determination reduces the administrative burden on both the FBR and the retailers. By making the process more straightforward and transparent, the plan aims to increase tax compliance among small shopkeepers and retailers.
