KARACHI: In response to protests by small retailers against the fixed retailers’ tax introduced in the Finance Act 2022, Finance Minister Miftah Ismail has promised to look into their demands and hinted that some concessions may be made in the tax regime.
To voice the concerns of small retailers, Chairman of the Businessmen Group (BMG) Zubair Motiwala and President of the Karachi Chamber of Commerce and Industry (KCCI) Muhammad Idrees had organised a meeting of business associations and held talks with the finance minister and chairman of the Federal Board of Revenue (FBR) by Zoom.
During the session, leaders of the business community expressed concerns over the high rate of taxes being charged through electricity bills. They argued that commercial consumers are already paying multiple taxes in their monthly electricity bills, including fuel adjustment surcharge, electricity duty, income tax, general sales tax, extra GST, further GST besides electricity charges. In addition to all that a new fixed tax has been levied on all commercial consumers, which is unsustainable.
In the meeting held on the premises of the KCCI between the country’s finance team and small traders, Finance Minister Ismail promised to waive multiple taxes on electricity bills and also agreed to consider the demands of small traders to increase the tax threshold.
After taking the leadership of small shopkeepers on board, Zubair Motiwala and Muhammad Idrees urged the government to accept the genuine demands of the small businessmen who are already struggling to make both ends meet and increase the suggested threshold of 150 units of electricity consumption from fixed tax regime and remove other taxes from electricity bills.
A.Q. Khalil, the general secretary of BMG and former president of KCCI, stressed on the need to remove other taxes from the bills and said that all NTN holders be considered as filers under the fixed tax regime.
The government is already charging hefty amounts in multiple taxes on electricity bills on commercial units, including electricity duty, General Sales Tax (GST), Extra GST, Further GST and Income Tax U/S 235.
The finance minister promised to remove all the other taxes from the electricity bills once the fixed tax regime is activated, to avoid double taxation. Only GST on electricity consumption will be applicable and at the end of the year, they will be required to submit a document to intimate the tax authorities about the payment of taxes during the year.
In the Finance Act FY22, the government imposed a fixed tax regime for retailers whereby even the unregistered consumers with zero or minimal units were getting Rs 6000 monthly tax on electricity bills.
After a hue and cry from small traders against the new fixed tax regime for retailers, the finance minister announced a revision in the scheme under which up to 150 units of electricity consumption were exempted from the tax and removed the condition to charge double amount of tax from unregistered traders, making it a full and final tax and also granted immunity from tax notices, audits and raids by FBR officers.
The KCCI office-bearers had held an urgent meeting with a delegation of small businessmen receiving fixed tax on electricity bills that was headed by Abdul Majeed Memon, chairman of the Special Committee for Small Traders of KCCI, and Talat Mehmood, the committee’s co-chairman, who were accompanied by representatives of several market associations of Karachi.
The KCCI had invited representatives of all the associations of Karachi to the meeting and a vast majority of them participated in the session, where they unanimously agreed to the decision of BMG chairman that the tax may be levied on the basis of units of electricity consumed, with those consuming up to 250 units to be exempted from tax and those consuming more than 250 units to be charged a fixed tax accordingly.
It was also unanimously agreed that all the other taxes, including income tax, GST, Extra GST and Further GST, should be replaced with this single fixed tax as a ‘full and final tax’.
Copyright Business Recorder, 2022
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