CAP chairman says there exist ‘huge disparities’ in retail sector

ISLAMABAD: Chainstore Association of Pakistan (CAP) Chairman Asfandyar Farrukh, Thursday, made an astonishing disclosure that there were huge disparities in retail sector, as 10 percent of the formal retail sector was in the tax net while 90 percent belonged to the informal retail sector.

He was addressing an event organised by Pakistan Retail Business Council (PRBC), here on Thursday.

He added that it is becoming difficult to run the formal retail sector.

Farrukh argued that the formal sector was making a tax contribution of about 25 percent of its turnover, while the informal sector was paying nothing so this mechanism was making customers lucrative to buy from those who were paying no taxes.

State Bank of Pakistan, Deputy Governor, Saleem Ullah said the digital payment system would be fully implemented over the next five years.

He said there were certain prerequisites including placement of the overall regulatory environment to promote digital payment.

The way forward, he said, was to restore confidence, whereby, there should be no harassment of taxpayers.

FBR’s Member Legal Mir Badshah Wazir said the Point of Sale (POS) integration was under way as it kick-started in 2019 when there were only 78 tier-1 retailers linked with POS. Now, there are 12,249 tier-1 retailers connected with POS, whereby, 660 million receipts were generated with FBR linked POS in the last fiscal year.

Till February 2025, the number of POS generated receipts stood at 444 million and it was hoped that the number might touch 900 million or one billion receipts.

He said the Tajir Dost Scheme (TDS) could not yield the desired results but the FBR took policy measures so there was a big jump in receiving an increased number of returns from the retail sector. He said the FBR received six million income tax returns but there was a substantial number who filed nil returns to avoid increased rate of withholding tax deductions.

The FBR’s Member Inland Revenue Operation, Hamid Ateeq Sarwar, said the tax for tier-1 retailers was fixed on the lower side in 2018, but due to the IMF condition the concessionary tax regime was withdrawn.

He said the FBR could offer lower tax rates for the formal retail sector if no input adjustment was claimed but it could be done only with the consent of the IMF.

Salam Ahmed Member of PM’s Economic Advisory Council and Chairman PRBC Ziad Bashir also spoke and said that retail was the backbone of the economy as a major GDP contributor, employing millions and driving commerce forward.

Copyright Business Recorder, 2025