Federal govt unveils scheme to bring small shop owners into tax net

Islamabad: Finance Minister Muhammad Aurangzeb has said that the government wants to expand the tax net to reduce the burden on existing taxpayers.

Addressing a joint news conference along with Minister of State for Finance, Bilal Azhar Kayani in Islamabad, he said that Pakistan’s economy remained stable despite last year’s floods and the ongoing Middle East conflict.

He added that Pakistan overcame these challenges using its indigenous resources and did not seek foreign assistance in this regard. He emphasized that in order to generate revenue, the expansion of the tax net is inevitable. He said that a fixed tax scheme is being introduced for small traders and retailers.

Outlining details of the scheme, Bilal Azhar Kayani said that the scheme carries a fixed tax rate of one percent, while any withholding tax already deducted will be adjusted against it.

He added that the minimum tax payment under the scheme would be 25,000 rupees, while businesses with higher turnover would pay tax at one percent according to their sales volume.

Bilal Azhar Kayani said that an optional fixed tax scheme has been introduced in consultation with small traders and retailers. The scheme is meant for traders with an annual turnover of up to 200 million rupees. Shop owners in the fixed tax scheme will be exempted from using POS (point of sale) machines.

The Minister of State said that a plaque with a QR code will be fixed at shops, which will be scanned by FBR officials to verify the taxpayer status of the particular shop.

He added that a single-page form has been introduced for small traders and retailers, which will be available in Urdu as well as regional languages. He said that those who want to benefit from the fixed tax scheme will submit the form along with a minimum payment of 25,000 rupees.

He added that traders who do not want to benefit from the fixed tax scheme can remain general taxpayers. He also mentioned that already deducted withholding tax will be adjustable.

Bilal Azhar Kayani said that retailers and small traders in the fixed tax scheme will be exempted from general audits, and a committee will be formed to handle any audit-related issues.

He said that non-filers as well as existing filers are eligible to join the fixed tax scheme.

He said that those traders who are filers and want to join the fixed tax scheme should have a turnover of 200 million rupees or less during the previous three years.

He said that those who will neither file return under the fixed tax scheme nor become filer through general tax regime will be fined with 10,000 rupees in first month, 25,000 rupees in second month and 50,000 rupees in the third month.