FBR brings 15,000 shopkeepers under income tax net in Karachi

• 15,000 shopkeepers brought under income tax next
• 1,000 shopkeepers register for sales tax

KARACHI: The Federal Board of Revenue managed to get around 15,000 shopkeepers to file their annual income tax returns for the financial year 2020 by identifying small retailers who have been earning taxable income for many years.

According to a report in The News, the Regional Tax Office (RTO) Karachi conducted surveys of various markets in Saddar, Clifton, and Defence and sent notices to shopkeepers. An official said the pace of filing was slow till September 2020 but gained momentum during October-December 2020 period.

With this, the income tax collection jumped by 51% to Rs2.75 billion during the first half of the current fiscal year as compared to Rs1.8 billion last year. A year-on-year analysis showed an unprecedented growth of 300% to Rs1.66 billion in December 2020 compared to Rs418 million in December 2019.

According to RTO officials, the shopkeepers were not Tier-1 retailers i.e. those who have different requirements of obtaining registration under both sales and income tax laws. Persons having taxable income are required to get income tax registration under Section 181 of the Income Tax Ordinance, 2001.

RTO Karachi also ensured those making taxable supplies had registered for sales tax. An official said this exercise saw 1,000 shopkeepers obtaining sales tax registration number (STRN).

The official said that RTO Karachi was in the process to bring more shopkeepers into the tax net as a large number of notices had been served for compliance.

“The tax office will initiate penal action against persons who fail to get registration and file their annual income tax returns,” the official added.