ISLAMABAD: The Federal Board of Revenue has rejected the proposals put forward by a taskforce set up under the supervision of FBR Member HRM to bring retail sector into the tax net.
The taskforce has submitted proposals to FBR Chairman Tariq Bajwa for bringing retail sector into the tax net.
As per details, the proposals have been rejected on ground that they are not practicable and cannot be implemented for one reason or the other. The FBR had specifically mentioned in the Terms of Reference of the taskforce to propose policy and enforcement measures for bringing the retail sector into the tax net. The proposals are not viable and cannot be incorporated.
For example, the taskforce proposed that an alternative approach to tax collection could be a flat tax on unregistered retailers. The report said the flat rate/fixed tax scheme was introduced in 1991 and it envisaged a fixed tax of Rs600 and Rs900 for rural and urban areas respectively, payable in two instalments in the post offices. However, the response from the traders was far less than expected as in 199-92 only 10,259 taxpayers opted for the scheme, of which only 1,955 paid the two instalments.
The tax managers were expecting out of the box solution for registration of retailers, but the taskforce failed to submit any viable suggestion. Other proposals of the taskforce included every withholding agent making taxable supplies to retailers may be obliged to obtain name and CNIC/NTN from the buyer and provide to tax authorities. The taskforce has also proposed strict enforcement of tax laws to document the retailers.
The taskforce proposed that all commercial electricity and gas connections may be tagged with NTNs in collaboration with the power and gas distribution companies respectively to have access to utility payments of the consumers.
It also proposed that the FBR should introduce a simplified income tax return form for retailers. This is a very old proposal and repeatedly discussed at different forums in the past. It proposed that the FBR should establish permanent cell comprising IT Wing and Chief Commissioners for generation of reports of un-enrolled potential taxpayers.
