ISLAMABAD: Federal Board of Revenue (FBR) has drafted special procedure for collection of income tax from small shopkeepers.
FBR sources said that an agreed mechanism between the FBR and small traders would be implemented from next week.
They said that it would be another big achievement of the tax agency after convincing the banks for sharing information of account holders.
The share of retailers in income tax collection is very low when compared with their contribution towards the national GDP.
The sources said that on October 30, 2019 the agreement was finalized between the FBR and small traders for the collection of income tax and also to remove procedural glitches.
According to draft law the small shopkeeper means an individual where the business is carried out at a premises having covered area less than 300 square feet.
The small business owners will not include in the definition of small shopkeeper if he is engaged in the activity of a jeweler, wholesale, warehouse, real estate agent, builder and developer, doctor, lawyer, chartered accountant or any other category specified by the Board, a retailer operating as a unit of a national or international chain of stores, a retailer operating in an air-conditioned shopping mall, plaza or center, a retailer who has a credit or debit card machine, any person whose cumulative electricity bill exceeds Rs300,000 in the immediately preceding twelve months; and any person covered under section 99C of the Income Tax Ordinance, 2001.
As per the draft law the small shopkeepers will be liable to pay income tax biannually.
The FBR will not conduct examination and audit of small shopkeepers. Further, shopkeepers will also not liable to collect withholding tax.
The sources said that the rate of tax likely be notified next week. They said whatever tax rate is agreed the tax payment will be increased by Rs5,000 annually.
The FBR will also notify simple income tax return form for small shopkeepers, which will be filed for tax year 2019 onwards.