FBR mulling options to penalise unregistered traders

ISLAMABAD: With the registration of only over 105 retailers in the ongoing Tajir Dost Scheme, the FBR is mulling over different options to abolish the Non-Active Taxpayer List (Non-ATL) and slap exorbitant rate of 10-15 percent for selling to unregistered retailers.

The FBR is deliberating upon different options for making businesses non-registered unviable instead of chasing 3.6 million retailers in the country.

It can only be done through drastic administrative measures. Hence, options are under consideration to come up with the imposition of a highly exorbitant rate on sale of goods at the stage of wholesalers/distributors in the range of 10 to 15 percent along with submission of Computerized National Identity Cards (CNICs) for all buyers of goods in bulk.

If this scheme of things gets approved at the political level, retailers without coming into tax net will not be able to run their businesses as commercially viable.

“The FBR is making plans to float an idea before the Minister for Finance Muhammad Aurangzeb and if he grants his nod, the FBR can propose changes in the tax laws on the eve of the upcoming budget 2024-25,” top official sources confirmed while talking to The News here on Wednesday. Registration for the ongoing Tajir Dost Scheme will end on April 30, 2024.

Under Section 236G of Income Tax law, there is an advance withholding tax of 0.1 percent on sale to distributors, dealers and wholesalers who are under the Active Taxpayer List (ATL) and there is 0.5 percent on non-ATL.

Under 236H, there is an advance tax on sales to retailers; there is advance tax of 0.5 percent on ATL retailers while 1 percent tax on non-ATL retailers. Now it is under consideration to keep withholding tax at same rates for ATL on sale to distributors, dealers and wholesalers while tax on non-ATL might be slapped in the range of 10 to 15 percent. The same will be applied under 236H where the ATL taxpayers’ rate will remain the same while for non-ATL, the rate is proposed to be jacked up to 10 to 15 percent.

Official data of the FBR shows that around 0.5 million dealers, distributors, wholesalers and retailers exist under both provisions of tax laws in the shape of ATL and non-ATL. Now it is also proposed that the CNICs requirement might be made mandatory for all manufacturers and throughout supply chain so that the unregistered could be penalised with higher rate of advance withholding tax.