Caretaker govt finalises scheme to tax retailers

ISLAMABAD: The caretaker government has finalised a much-awaited simplified retailers scheme to bring millions of retailers into the tax net.

The sources confirmed to The News on Friday night that the retailers’ scheme was finalised and could be announced anytime.

The Pakistan Revenue Authority Limited (PRAL), a subsidiary of the FBR has developed the mobile App “Tajir Dost” which is a national business registry in which all retailers and traders will have to register. Already registered persons will have already their names in the Tajir Dost database.

It is proposed that the quantum of indicative income to be determined equal to the annual rental value (determined at 10 percent of shop valuation) may be accepted as the purpose to document the retail business and ensuring subsequent filing of income tax returns. The FBR is considering to bring online retailers into tax net. The working has been underway in consultation with online marketplaces such as Daraz and others and it is yet to see how these online retailers will be brought in the tax net.

The scheme does not provide any concessional tax rates to the shopkeeper except (i) an early bird discount of 50 percent tax reduction on filing of tax return for Tax Year 2023 between the date of announcement of scheme and the date of first installment of payment; (ii) a 25 percent discount of tax if a lumpsum payment for the entire year is made (for current year this will mean the installments of four months between March and June, 2024).

The Tajir Dost App has been designed with user friendly features requiring minimal entry of data and it minimises the contact between the shopkeeper and his tax consultant as well as the shopkeeper and the tax collector. The App will automatically calculate the monthly tax payment, keep the record and will facilitate the shopkeeper to pay the same.

The scheme will cover all shopkeepers providing services or supplies of goods including professions etc.

The income tax paid under the scheme will be an advance tax to be treated as minimum tax but adjustable against total Income tax payable for TY2024 and similar treatment for next tax years i.e. there will be no refund of income tax paid under this scheme.

The shopkeeper will assess himself for TY2024 (and subsequently) like the any other taxpayer will file his annual income tax return as per the standard income tax returns forms and can claim the adjustment or refund of other adjustable advance taxes deducted or collected already in other heads e.g. on purchase of a motor vehicle etc.

The defaulters of monthly payments will face penal consequences like shop sealing or imposition of monetary penalty equal to his monthly instalment due.