FBR mulls options to rope in traders into tax net

• FBR mulls unveiling simplified fixed scheme based.
• Board seeks to bring 3.6 million retailers in tax net.
• Only 78 retailers registered to Tajir Dost Scheme. 

ISLAMABAD: Amid the dismal performance of Tajir Dost Scheme registering only 44,830 retailers, the Federal Board of Revenue (FBR) is contemplating options to unveil a simplified fixed scheme based on valuation of shops to bring 3.6 million retailers in the tax net.

All schemes for bringing retailers in the tax net have miserably failed in more than three decades at least since the 90s.

There is a need to do something different to create any impact but if another routine scheme is going to be introduced, it would be bound to fail another time in the history of the country.

“We are contemplating upon different options for bringing 3.6 million retailers into the tax net and this time the FBR plans to come up with different slabs based on the valuation of shops. A fixed tax might be introduced to lure them into the tax net,” top official sources confirmed while talking to The News on Friday.

Valuation of properties, the sources said, had been underway in major cities and towns which might be notified within the ongoing month. Based on the valuation of different markets in different cities, the FBR plans to introduce a fixed slab-based scheme for retailers in the tax net.

“Different features of the fixed scheme for retailers are under study and will be launched soon probably next week,” said the official.

The FBR launched the Tajir Dost Scheme on volunteer basis in selected six cities with the deadline of April 30, 2024. However, only 78 retailers got them registered.

The FBR then involved trader leader Naeem Mir and continued its registration drive. To date, only 44,830 retailers have opted for the scheme out of over 3 million retailers countrywide.

The shutter power always forced the ruling elites and FBR to take stern actions against retailers. The FBR had taken steps to collect taxes through electricity bills and the size of the shops in the recent past but every effort was met with failure.

The Point of Sale (POS) machines were installed in branded shops but lack of proper technology, operational framework and piecemeal approach within the ranks of the FBR resulted in the failure of all IT-based solutions including POS, Track & Trace and Digital Invoicing in a miserable manner.

Top FBR officials argued that there was no element of cohesive vision on the documentation of economy in our country, as no mechanism existed on the ground for registration of any retail shop. So, the state basically assumes that the FBR will register every retailer and then bring them into the tax net without an assigned workforce.

The FBR has decided to launch retailers’ fixed scheme next week. Earlier, it was envisaged that a meager amount of Rs12,000 would be charged from retailers on the basis of Rs1,000 per month. A simplified form will have to be filled by the retailers.

The government had informed the International Monetary Fund (IMF) that to facilitate the sustainable medium-term adjustment, the government will focus on mobilising significant additional revenue through policy reforms to broaden the tax base, especially in undertaxed sectors; enhance revenue administration; and incentivise greater and more balanced fiscal efforts by the provinces. 

Enforcing income tax returns and collecting the due minimum advance income tax will begin on July 1, 2024.

Originally published in The News