In consultation with the retailers from all four provinces, the Central Board of Revenue (CBR) has decided to issue a new scheme for retailers and traders in the budget for 2007-08 to increase income tax and sales tax collection by bringing maximum retailers into the tax net.
On conclusion of a budget meeting with CBR Chairman Abdullah Yusuf and Member Direct Taxes Salman Nabi, representatives of retailers told Business Recorder that the CBR and All Pakistan Traders Association (APTA) on Saturday night reached consensus on a new mechanism for payment of both income tax and sales tax, to be applicable from July 1, 2007.
The new scheme for retailers would be announced in the budget speech and would be promulgated through Finance Bill 2007-08. Under the new scheme, retailers having annual turnover up to Rs 5 million will pay 0.5 percent tax; Rs 5 million to Rs 10 million, Rs 25,000 plus one percent of the amount of the turnover exceeding Rs 5 million; and retailers having turnover above Rs 10 million would pay Rs 75,000 plus 1.5 percent of the amount of turnover exceeding Rs 10 million.
According to the agreement, all withholding tax deducted under any head would not be accounted for under this scheme. The amount of tax paid under the new scheme will be the tax liability under income tax as well as sales tax, the agreement concluded. Retailers stated that it was a big achievement of the CBR chairman, who successfully convinced the traders'' community to get registered and pay due taxes.
During the budget exercise, the Board has been working on this new mechanism for increasing the number of registered retailers and increased payment of taxes by this potential area. In this connection, both CBR Income Tax and Sales Tax Wings were working on new procedure for past two months.