The Federal Board of Revenue (FBR) is likely to announce a 'fixed scheme' for the retailers to attract the sector for payment of a fixed amount under the documented regime from 2011-12. Sources told Business Recorder here on Monday that the idea of obtaining 'fixed tax' from the retail sector was discussed during the last meeting of the Revenue Advisory Council (RAC) of the FBR.
The Board is exploring the possibility to introduce a 'fixed scheme' for the retailers to encourage registration of the retail sector. It has been observed that the existing procedure of income tax payment by the retail sector has not achieved the desired results.
Under section 113B (taxation of income of certain retailers) of the Income Tax Ordinance 2001, a retailer being an individual or association of persons, whose turnover exceeds Rs 5 million and who is subject to special procedure for payment of sales tax under chapter III of the Sales Tax Special Procedure Rules, 2006, shall pay final tax at the specified rates which shall form part of single stage sales tax.
According to section 113B of the Ordinance 2001, where turnover of exceeds Rs 5,000,000 but does not exceed Rs 10,000,000, the rate of tax would be Rs 25,000 plus 0.5 percent of the turnover exceeding Rs 5,000,000. Where turnover exceeds Rs 10,000,000, the rate of tax would be Rs 50,000 plus 0.75 percent of the turnover exceeding Rs 10,000,000. However, the retailer shall not be entitled to claim any adjustment of withholding tax collected or deducted under any head during the year. Provided that turnover chargeable to tax under this section shall not include the sale of goods on which tax is deducted or deductible, it added.
According to sources, there is a need to study some kind of attractive scheme for the retailers to encourage them to voluntarily come forward and file their income tax returns. In the presence of existing procedure pertaining to taxation of income of certain retailers, the FBR has to announce some lucrative scheme in budget for 2011-12) for registration of retailers.