Retailers Tax Scheme Faces Major Setback as Only 1,750 Shopkeepers Register; FBR Decides on Strict Penalties, Including Fines Up to Rs 50,000 and Shop Seals for Non-Filers Amid October Revenue Shortfall
ISLAMABAD: The Federal government has been actively trying to expand the tax base to include retailers, but there has been significant resistance and the authorities have decided to take tough action against those who are persistently failing to pay.
Sources quoted a figure of Rs 50 billion that the government initially had in mind to be collected through the retailers’ tax scheme. But, notwithstanding the introduction of a simplified registration system, only 1,750 shopkeepers have availed of it and only 220 new shopkeepers have joined the tax net under the scheme.
To wrap up, here are some of the highlights of FBR’s Retailers Tax Scheme and Revenue Shortfall.
A series of financial penalties is proposed against the non-filers as financial penalties are increased for the subsequent month of default: Rs 10,000 for the first month, Rs 25,000 for the second month and up to Rs 50,000 for the third month of default. In addition, the tax authorities have administrative powers to seal the shopkeepers’ shops that refuse to enter the tax system.
Now the Federal Board of Revenue (FBR) has identified about 3.6 million potential non-filer retailers in retail sector all over the country. The FBR has planned and is to implement a comprehensive geo tagging of commercial markets to enforce documentation. Importantly, the income tax return filing deadlines were extended twice before, with FBR receiving 7.6 million income tax returns till October.
Tax Collection Shortfall: The FBR also suffered a significant revenue shortfall in October as it collected 30% of the revised revenue target (Rs 1,132 billion) with only Rs 975 billion for the first 30 days. As a result, total tax revenues for the first four months of the fiscal year (July–October) were Rs 4,058.5 billion compared with the target of Rs 4,185 billion, resulting in a deficit of Rs 126.5 billion for this period.