Wholesalers, distributors and retailers have expressed their disappointment with the approach of newly-appointed Chairman Federal Board of Revenue (FBR) Syed Shabbar Zaidi, saying that he was making no sincere efforts in rationalizing taxes despite having understanding of the problems of taxpayers.
Talking to this scribe, they have pointed out that the average margin of a wholesaler hovers around 1.5 percent, followed by 5 percent of a distributor and 7 percent of a retailer while the FBR demands 6 percent tax from each category, ie. 1.25 percent minimum tax under section 113 of the Income Tax Act, 2 percent sales tax and 3 percent withholding tax.
They said the minimum tax under section 113 should not be more than 0.25 percent and that should also be charged as a fixed tax in order to facilitate the wholesalers, distributors and retailers.
According to them, how a wholesaler, distributor and retailer can pay 3 to 4 percent withholding tax when its total margin does not exceed to 3 percent after meeting day to day expenses. So far as the general sales tax is concerned, that a retailer seldom gets an invoice from both distributor and wholesaler, therefore, it is always difficult for him to adjust GST in its sales. They said majority of super stores are paying 2 percent sales tax on their sale without an input and output mechanism in place.
When asked about the expenses, one retailer pointed out that he is selling sugar at Rs 65 per kg after procuring it at Rs 464 per kg. This cost increases soon we hand over one kilogram sugar to a buyer in a shopping bag. In other words, he said, supply of goods in shopping bag costs one percent of the sale to a retailer. Therefore, it becomes difficult for the wholesalers, distributors and retailers to pay heavy taxes on their day to day business. Chairman FBR should keep these practical hiccups in mind and rationalize taxes in order facilitate the business community. They said the business community would easily pay taxes subject they have been rationalized in consultation with stakeholders. Without rationalizing taxes, all efforts made by the newly appointed Chairman FBR would prove a futile exercise and Syed Shabbar Zaidi would be cutting a sorry figure like former Finance Minister Ishaq Dar at the end of the day, they stressed.
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