Collectorates of Sales Tax and Federal Excise have registered certain potential retailers on the basis of annual turnover declared with the income tax department under the ongoing national exercise to broaden the tax-base. Sources told Business Recorder on Sunday that the collectorates have conducted exercise to verify income tax data available with the returns and NTN Master Index.
This information is helpful in identifying retailers, who have declared annual turnover of Rs 5 million with the income tax department, but not registered with the sales tax department.
The collectorates have served notices to the potential retailers, who were liable to registration based on the income tax database. Under the exercise, units have been registered with the sales tax department, which would ultimately increase filers of returns.
Apart from the existing registration threshold of supplies of Rs 5 million per annum, a new parameter based on utility bills was introduced by amending the Sales Tax Act, 1990 in Budget 2007-08. Through this change, manufacturers having utility bills of more than Rs 600,000 per annum would also be required to obtain sales tax registration.
Sources said it is difficult to register ordinary retailers on the basis of utility bills, as only leading retail outlets are using extensive electricity. However, this condition is more helpful in detecting units engaged in the manufacturing process. The retailers have to declare their last fiscal sales in the income tax return they added.
Under the agreement agreed between the retailers and the FBR, the retailer whose turnover exceeds Rs 5 million but does not exceed Rs 10 million would be required to pay Rs 25,000 plus 0.5 percent of the turnover exceeding Rs 5 million. Where turnover of the retailer exceeds Rs 10 million he would be required to pay retail tax of 0.75 percent of the turnover exceeding Rs 10 million. Retailers would not be entitled to claim any adjustment of withholding tax collected or deducted from them under any head during the year. Sources said that the sales tax registration of retailers on the basis of electricity is the only effective method to broaden the tax-base.