The Federal Board of Revenue (FBR) is preparing to launch a simplified fixed tax scheme based on the valuation of shops to bring 3.6 million retailers into the tax net. This move follows the unsuccessful Tajir Dost Scheme, which managed to register only 44,830 retailers out of over 3 million nationwide.
FBR officials aim to implement a new approach with different tax slabs based on shop valuations, which will be notified soon. The new scheme will feature fixed tax amounts to attract retailers to the tax net. This plan arises from the need for a different strategy, as previous efforts to tax retailers have repeatedly failed over the past three decades.
The Tajir Dost Scheme, initiated on a voluntary basis in six cities with an April 30, 2024, deadline, saw minimal success. The involvement of trader leader Naeem Mir and an extended registration drive brought the total registrations to just 44,830. Previous attempts, including taxing through electricity bills and shop size, as well as IT-based solutions like POS machines, have also failed due to lack of proper technology, operational frameworks, and cohesive vision for economic documentation.
The FBR’s upcoming scheme, expected to launch next week, envisions charging retailers a nominal amount, such as Rs12,000 annually, based on Rs1,000 per month, with a simplified form for registration. This effort aligns with the government’s commitment to the International Monetary Fund (IMF) to broaden the tax base, enhance revenue administration, and incentivize balanced fiscal efforts by provinces. Enforcing income tax returns and collecting minimum advance income tax will begin on July 1, 2024.
