ISLAMABAD: The Federal Board of Revenue (FBR) is working out a new scheme for the documentation of small retailers in the coming budget (2023-24).

The Reforms & Revenue Mobilization Commission (RRMC) has devised a specialized regime for small retailers and specified services providers.

According to the recommendations of the RRMC, the scheme will be applicable for retailers other than Tier-I retailers/specified service providers having turnover up to Rs10 million, and in case of retailer-cum-service providers having aggregate turnover up to Rs. 10 million in a tax year who have not filed income tax return for any preceding five tax years.

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Secondly, the eligible persons under this scheme will be included in ATL upon filing of return under this scheme.

Thirdly, the tax collected or deducted from eligible person under various withholding provisions of Income Tax Ordinance 2001 will be non-adjustable/non-refundable.

Fourthly, the return on income can be filed through IRIS/mobile app by eligible person under this scheme.

This scheme will not be applicable to person whose profit on debt in a tax year is in excess of Rs. 5 million.

Under the proposed scheme, the eligible persons under this scheme can opt to file normal income tax return.

The tax collected by DISCOs on commercial electricity connection in a tax year will be tax liability for eligible person under this scheme.

Moreover, the credit of imputable income will be available to eligible person under this scheme, proposal added.

Through Tax Laws (Second Amendment) Ordinance, 2022, sales tax from other than Tier-1 retailers shall be collected through their monthly electricity bills. It has been noted that the same has not been implemented effectively. Furthermore, tax collection based on electricity bills from bulk meters (like shopping malls and office buildings, towers) results into loss of revenue as the tax collection is not linked to the actual tenants (retailers/offices, etc). It is recommended that the FBR should implement it effectively in order to get information of store/office/retail outlet size and possible turnover based on electricity usage. Afterwards, necessary amendments can be made in order to increase tax revenue. It is also suggested to derive a mechanism for linking electricity consumption with actual users (e.g., DISCO customer number against bill payment mechanisms), the RRMC added.

Copyright Business Recorder, 2023