By Abdul Wajid Khan

ISLAMABAD, August 2, (INP-WealthPK): The fixed tax regime introduced by the government for retailers in the country is likely to contribute approximately Rs42 billion on a monthly basis to the national exchequer, reports WealthPK

Federal Board of Revenue (FBR) spokesperson Asad Tahir Jappa said that the fixed tax regime for retailers was actually not a new development but had been in effect since 2014 when commercial consumers were categorised on the basis of their monthly bills.

He said that a fixed tax of five percent was imposed on the retailers, whose monthly bills were up to Rs25,000, and 7.5 percent on those, whose bills exceeded Rs25,000. He added that the recent amendments to the Finance Act, 2022, changed the methodology and divided commercial consumers into three categories.

After July 1, 2022, the retailers having commercial electricity bills up to Rs30,000 will be levied with a fixed tax of Rs3,000 and a tax of Rs5,000 will be imposed on the bills between Rs30,001 and Rs50,000 while the people, whose bills exceed Rs50,000, will have to pay Rs10,000.

The FBR spokesperson said that the fixed tax regime was applicable across Pakistan, irrespective of geographic location. “The only difference is between filers and non-filers. The rates are applicable to small traders and retailers, who are on the ‘active taxpayers list’ and have cleared all dues for the years 2020 and 2021. Non-filers will be automatically charged double the amount,” he added.

He termed the monthly fixed tax regime a facility for small traders and retailers, saying they should take advantage of it. “They should visit the office of the relevant commissioner and clear their dues and get on the ‘active taxpayers list’ to take advantage of the tax regime,” he added.

Asad Tahir said that FBR did not have the capacity to monitor the individual business activity of hundreds of thousands of commercial connections across the country. The fixed tax regime can be compared to a monthly line rent or subscription service, which is payable even if the service is not used.

Conservative estimates shared by the FBR stated that approximately Rs42 billion could be collected on a monthly basis through the implementation of this nationwide tax policy. All transactions on electricity bills after July 1 will be taxable under this policy. Non-compliance with tax obligations and hesitancy to declare assets and pay taxes were major causes of the current economic crisis in the country.

It is pertinent to mention that FBR exceeded its revised tax revenue collection target of Rs6.1 trillion by Rs25 billion in the previous fiscal and it fixed a target of Rs7.4 trillion for the current fiscal year. The government is also planning to increase the gross federal revenue to Rs12,442 billion by the financial year 2024-25 by implementing its plan to reduce deficits and restore fiscal sustainability.

According to the medium-term fiscal framework of the Ministry of Finance, FBR revenue has been projected at Rs7,400 billion for the financial year 2022-23, which will be increased to Rs8,500 billion in the financial year 2023-24 and to Rs9,800 billion by the financial year 2024-25.

The non-tax revenue will be increased to Rs2,642 billion by 2024-25 from Rs2,000 billion for the financial year 2022-23 and it has been estimated at Rs2,033 billion for the fiscal year 2023-24.

Hence, gross federal revenue will be increased to Rs12,442 billion by the financial year 2024-25 from Rs9,004 billion for 2022-23 while gross federal revenue has been projected at Rs10,533 billion for the fiscal year 2023-24.

Credits: Independent News Pakistan—Wealthpk