FBR considering new taxation strategy for retailers

ISLAMABAD: In a bid to streamline tax collection, the Federal Board of Revenue (FBR) is contemplating the implementation of a fixed tax system ranging from Rs1,000 to Rs5,000 per month for 3.6 million retailers nationwide.

According to The News, FBR is devising a plan to eliminate tax collection from small traders and shopkeepers via electricity bills. Instead, they are considering introducing new fixed schemes for both urban and rural areas.

Under the proposed scheme, retailers with shops measuring 100 square feet may face a tax of Rs1,000, while those with shops ranging from 200 to 300 square feet could be taxed Rs3,000. Larger shops measuring 500 square feet in urban areas might incur a fixed tax of Rs5,000.

In rural areas outside municipal committee jurisdictions, a flat rate of Rs1,000 per shop is being considered.

Retailers would be given the option to include the paid tax in the following year’s tax return filing. The process is expected to be simplified, with a one-page form to avail of this fixed scheme.

When questioned about the proposed scheme, the FBR Chairman said that no proposal has been finalised yet. Once the proposal is formalised by the FBR, it will be presented to the finance minister.

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If approved, the caretaker government would not need new legislation or wait for new assemblies to enact amendments, as the FBR has the authority under existing parliamentary-approved laws to introduce such schemes for retailers.

However, there is uncertainty regarding the public response. Past attempts to bring retailers into the tax net faced significant opposition.

Previous Finance Minister Miftah Ismail’s effort to increase tax collection through electricity bills was met with strong resistance, leading to its withdrawal following traders’ concerns raised by Maryam Nawaz.

The fate of this new proposal hinges on whether the caretaker government can navigate the pressure from shopkeepers and successfully implement its plans to broaden the tax net across various sectors.