Karachi, October 5, 2023 – The Federal Board of Revenue (FBR) in Pakistan has taken a significant step to expand the tax base by obtaining transaction records of retailers operating in the country. Sources within the FBR have revealed that this move is part of a broader effort to bring more businesses within the tax net.
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According to FBR sources, the organization has acquired detailed transaction records from relevant withholding agents to assess the sales made by retailers. This initiative involves the collection of information on supplies made by manufacturers, distributors, dealers, wholesalers, and commercial importers to retailers across various sectors.
The FBR’s data collection covers a wide range of goods and industries, including pharmaceuticals, poultry and animal feed, edible oil and ghee, auto-parts, tyres, varnishes, chemicals, cosmetics, IT equipment, electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textiles, beverages, and the paint or foam sector, among others.
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Under Section 236H of the Income Tax Ordinance, 2001, an advance tax has been imposed on retailers, with the responsibility for collecting this tax falling on the suppliers. This advance tax, collected by suppliers, will be credited to the retailer’s account and allowed as a deduction when calculating the tax liability of the retailer for the tax year in which the tax was collected.
This initiative represents a significant step toward increasing revenue collection and broadening the tax base in Pakistan. By tracking transactions and imposing advance tax obligations on retailers, the FBR aims to ensure that businesses operating in various sectors contribute their fair share of taxes, thereby strengthening the country’s fiscal position.
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The move also aligns with the government’s broader strategy to promote tax compliance and reduce tax evasion, ultimately contributing to the overall economic development of Pakistan. As the FBR continues to implement measures to enhance tax collection and transparency, it is expected that these efforts will lead to a more equitable and sustainable tax system.
It is essential for retailers and suppliers affected by these changes to stay informed about their tax obligations and comply with the relevant regulations. The FBR will likely provide further guidance and support to facilitate a smooth transition to the new tax framework, ensuring that businesses can adapt and meet their financial obligations effectively.
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