specified in SRO 1125(I)/2011 dated December 31, 2011.
In the category II, the retailers would fall in others segment. The chargeability of sales tax on retailers of this category has been fixed through the payment of electricity bills, under which the monthly electricity bill of up to Rs20,000, the sales tax rate will be five percent and in case of exceeding the limit, the rate will be 7.5 percent.
Retailers of category II; however, allowed relaxation in filing monthly returns and were granted exemption from the audit.
The RTO official said in several cases the retailers had obtained registration, but not filing their monthly statement and the FBR headquarters is also not asking about their non-compliance.
The issuance of SRO 608 was an ambitious effort of the FBR to bring maximum number of taxpayers in the tax net. However, soon after the introduction of the notification, the business community strongly reacted.
When contacted, Iftikhar Vohra, president of the Karachi Chamber of Commerce and Industry (KCCI), said the members were not complaining about the enforcement of the sales tax on retailers.
“It appears the FBR officials and retailers have reached a settlement,” he said.
The KCCI president said there were high rate of irregularities among lower officials of the FBR. “On the other side, officials at the policymaking levels are far better, but do not have the capacity to enforce the laws,” he added.
The measure was introduced to broaden the tax base, but the previous cases that were identified are still not resolved, he said.
“The FBR has identified 240,000 potential taxpayers and initiated proceedings in only 117 cases,” he added.
An official at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said the law introduced in the Federal Budget 2014/15 was not enforced due to the lack of government will despite protests lodged by the business community.
The FPCCI in its Shadow Budget 2014/15 estimated Rs54 billion collection for the FBR against the aggregate collection of Rs1 billion from retailers. It suggested: “There are 1,500,000 retail shops in the country. Different slabs for collection should be created to collect tax from the shops according to their size and location.
“The collection of tax from retailers will be based on progressive system. The minimum tax suggested for retail shops is Rs1,000 per month; however, the rate for supermarkets and chain stores will be certainly different.”