The government has planned to switch various categories of retailers from the ambit of turnover tax to normal tax regime through Finance Act 2011, it is learnt. According to sources, the revenue body had allowed the retailers, vendors, shopkeepers, etc, to pay 0.5 percent to 0.75 percent turnover tax as final tax liability through sections 113A and 113B of the Income Tax Ordinance, 2001 aimed at bringing them into tax net.
However, the decision did not yield fruits in terms of revenue as the retailers, vendors, shopkeepers, etc who are serving 17 percent approximately to GDP are generating only 1.5 percent to 2 percent of total revenue.
Sources said this was mainly because of the provisions as contained in sections 113A and 113B of the Ordinance where the tax at the rate of 0.5 to 0.75 percent was leviable on turnover of various categories of retailers under Universal Self Assessment System (USAS). They termed this turnover tax as revenue stoppage, saying that it was neither contributing to the national kitty nor towards the documentation of economy.
Keeping this in view, the Federal Board of Revenue (FBR) has proposed to the authorities concerned to abolish the provisions of sections 113A and 113B from the Income Tax Ordinance, 2001 through Finance Act, 2011. Moreover, they said the revenue body had further suggested to switch all the retailers, vendors, shopkeepers, etc from the ambit of turnover tax to normal tax regime in order to increase revenue collection besides restricting them to file returns on income and loss basis.