Fixed tax scheme for small Traders

ISLAMABAD: The Federal Board of Revenue has released a draft of a fixed tax scheme to include small traders in the tax net.

According to the FBR notification, it has been proposed to collect one percent tax on the total annual turnover from eligible shopkeepers, however, it will be mandatory to deposit at least Rs 25,000 in cash tax.

The government expects to generate more than Rs 50 billion in revenue annually if the scheme is successful.

The scheme will be voluntary and shopkeepers will be able to submit regular income tax returns instead of the fixed tax scheme if they wish, however, owners of more than one shop, tier one retailers, jewelers and people providing professional services will not be eligible for this facility.

According to the notification, shopkeepers included in the scheme will be issued a special “green plate”, FBR officers will not enter the shop with the green plate for tax matters, while shopkeepers will also be exempted from installing POS machines and regular tax audits.

Registration can be done through the FBR’s IRIS portal, mobile app or the nearest tax office. For this purpose, a simple one-page tax return form has also been introduced, in which the name of the business, address, CNIC number, nature of the business, annual sales, purchases and expenses will have to be entered.

Shopkeepers will also have to provide details of net profit, other sources of income, taxes paid, immovable property, bank balance, available cash and other assets.

The FBR has clarified that in case of misuse of the scheme for purchasing heavy assets, hiding information or avoiding taxes despite minor business activity, audit and legal action will be taken.

The Federal Board of Revenue has also invited objections and suggestions on the draft within seven days.