New political government: bringing retailers into tax net an uphill task
The new political government would face an uphill task of bringing retailers into the tax net as all past regimes have failed in documenting the retail community and registering these outlets with the tax department. Tax experts told Business Recorder here on Monday that there are only 3,470 registered retailers, 21,176 wholesalers and 4,978 distributors with the sales tax department.
Copyright Business Recorder, 2013
On the income tax side, there are 25,722 registered retailers, 40,603 wholesalers and 6,174 distributors. The FBR data shows a bleak picture of the compliance by the retail sector. Any political party, after coming into power in upcoming elections would face the biggest challenge of documenting retailers. No past government has succeeded in bringing retailers into the tax net. In past, concessionary tax rates were offered to the retailers with simplified return forms, but retailers were not ready to display National Tax Numbers (NTNs) outside their shops or pay due amount of taxes. The FBR issued special procedure for the retailers to get them registered with the sales tax department. Similarly, special rates were offered on the income tax side, but retailers were not ready to file sales tax and income tax returns. The retail outlets are not ready to comply with the basic tax laws to display NTNs outside their business premises.
They said that any new political government would have to announce some lucrative policy for retailers to bring this non-compliant segment of the society into the tax net. In past, all such efforts failed to bring retailers into the documented regime.
One of the proposals is to install electronic cash registers in mega retail stores all over the country to launch an invoice-based lotto scheme. This will give customers incentive for getting receipts to win gifts through lottery schemes along the lines of a Turkish model. The solution is to bring retail and wholesale sectors into the tax net by doing away with the minimum limit of Rs 50 million and reducing the sales tax rate. A simple registration by provincial governments for licensing may be introduced for the retailers having sales up to Rs 50 million per annum, experts proposed.