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ISLAMABAD: Only 0.133 million retailers filed their income tax returns out of 2.3 million retailers who paid sales tax of Rs6 billion during 2021-22 under the fixed sales tax scheme through electricity bills.

The data was shared by the FBR Member Inland Revenue (Policy), Afaq Ahmed Qureshi, during the meeting of the sub-committee National Assembly Standing Committee on Finance held at the FBR House on Monday.

During FBR’s presentation on the Tax Laws (Second Amendment) Bill 2022, Qureshi talked about the negative aspects of the fixed sales tax scheme for traders through electricity bills.

The tax authorities informed that the expected new returns from the retail sector are 700,000 and estimated revenue collection at Rs42 billion. So far, only 0.133 million retailers filed their income tax returns during 2021-22. The new income tax return for the retailers will be notified during the current year, he said.

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The FBR Member said that the traders were facing issues during the fixed sales tax scheme through electricity bills. The tax rates were generated by the computer systems and resultantly the incidence of the tax has been increased on the trader due to the sales tax charged on the basis of power consumption. The data of the power distribution companies (Discos) was not updated and creating serious problems for the traders and shopkeepers. Moreover, the power distribution data was not in the name of the current users of electricity. The concept of differential taxation was introduced and tax amount was doubled for non-filers. Traders agitated due to the double taxation from non-filers as the electricity meters were not directly in the names of these traders. The fixed monthly tax was Rs3,000 for filers and Rs6,000 fixed tax per month for non-filers.

The FBR Member stated that a new income tax section was replaced with the earlier provision enabling the federal government to levy tax on retailers through the electricity bills at the rates to be specified in the income tax circular. At the same time, a new provision in the Sales Tax Act was inserted that empowers the federal government to levy and collect sales tax through electricity bills from retailers (other than Tier-I big retailers).

Under the Tax Laws (Second Amendment) Ordinance, 2022, the Fixed Tax Scheme introduced for retailers (other than tier-I retailers) on commercial electricity connection was withdrawn with effect from July 1, 2022, and the previous regime (prevailing prior to Finance Act 2022) was restored. Instead of the fixed tax on retailers that reduced revenue of Rs42 billion, the FBR reverted to the old system of ad valorem tax.

The convener of the committee Chaudhary Muhammad Barjees Tahir, MNA said that the Tax Laws (Second Amendment) Bill 2022 would not be passed in a hurry as certain taxes were imposed and some were removed under the said bill. The bill is expected to be cleared on Tuesday (today) by the committee.

Copyright Business Recorder, 2023

Comments

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Tulukan Mairandi Apr 11, 2023 04:49am
Amazing. In fact in a country facing famine and breakup,133k is a bigger than expected number.
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