Islamabad, July 22, 2024 – The Federal Board of Revenue (FBR) on Monday released valuation tables for the collection of income tax from shopkeepers and retailers located in 42 major cities of Pakistan.
The new tax rates, notified through SRO 1064(1)/2024, aim to streamline tax collection under the Tajir Dost Scheme.
The latest notification amends the previous SRO 457(I)/2024, issued on March 30, 2024. Significant changes have been introduced to ensure that only eligible shopkeepers and retailers benefit from the new tax rates. According to the FBR, retailers or shopkeepers who filed their income tax return for the tax year 2023 before March 30, 2024, and whose advance tax liability paid under section 147 exceeds the computed advance tax under this Special Procedure for the tax year 2025 and onwards, are not entitled to the new scheme.
Additionally, shopkeepers with a shop size of 100 square feet or less in a residential area or those whose income is exempt under any provisions of the Income Tax Ordinance are also not eligible for the Tajir Dost Scheme.
The advance tax payable on indicative income will be computed at the rates provided in Division I of Part I of the First Schedule to the Income Tax Ordinance, 2001, for the relevant tax year and as specified in Schedule – II. Furthermore, the advance tax payable under sub-paragraph (1) shall be reduced by 25% if the person pays the installments for the succeeding months in lump sum or if the person who has not filed an income tax return files one for the tax year 2023 and pays tax on their income equal to or more than the tax on indicative income computed in Schedule – II of this procedure.
For small shop owners, the FBR has specified that any person owning a shop of 50 square feet or less in a commercial area, or owning a makeshift shop, kiosk, or small shop measuring not more than 5×3 square feet, shall be liable for a fixed advance tax of PKR 1,200 per annum. However, this provision does not apply to commercial areas specified by the Board in Schedule – III, where advance tax will be paid as specified in Schedule – II.
The list of 42 cities that qualify for the Tajir Dost Scheme is as follows:
1. Abbottabad
2. Attock
3. Bahawalnagar
4. Bahawalpur
5. Chakwal
6. Dera Ismail Khan
7. DG Khan
8. Faisalabad
9. Ghotki
10. Gujranwala
11. Gujrat
12. Gwadar
13. Hafizabad
14. Haripur
15. Hyderabad
16. Islamabad
17. Jhang
18. Jhelum
19. Karachi
20. Kasur
21. Khushab
22. Lahore
23. Larkana
24. Lasbela
25. Lodhran
26. Mandi Bahauddin
27. Mansehra
28. Mardan
29. Mirpurkhas
30. Multan
31. Nankana
32. Narowal
33. Peshawar
34. Quetta
35. Rahim Yar Khan
36. Rawalpindi
37. Sahiwal
38. Sargodha
39. Sheikhupura
40. Sialkot
41. Sukkur
42. Toba Tek Singh
The Tajir Dost Scheme is designed to facilitate small retailers and shopkeepers in complying with their tax obligations while providing relief through a simplified tax regime. The FBR’s initiative aims to enhance tax collection efficiency and broaden the tax base by encouraging voluntary compliance.
By introducing these valuation tables, the FBR hopes to address the concerns of small retailers and shopkeepers who often find the tax filing process cumbersome. The simplified procedure and reduced tax rates for eligible participants are expected to motivate more businesses to formalize their operations and contribute to the national exchequer.
The FBR has also emphasized that the new valuation tables and tax rates are part of its ongoing efforts to reform the tax system in Pakistan. By making the tax regime more accessible and transparent, the FBR aims to foster a culture of tax compliance and reduce the informal economy’s size.
Retailers and shopkeepers are encouraged to review the new valuation tables and understand their tax liabilities under the Tajir Dost Scheme. The FBR has made the details available on its official website and through various public notices to ensure that all stakeholders are well-informed about the changes.
In conclusion, the FBR’s release of the new tax valuation tables for retailers in 42 cities marks a significant step towards tax reform and improved compliance. The Tajir Dost Scheme’s simplified approach is expected to benefit small businesses and contribute to a more robust and transparent tax system in Pakistan.