FBR study options to penalize unregistered traders

• Registrations for the Tajir Dost program will end on April 30.
  
• The government is considering action after a lackluster response from retailers.
• FBR plans to make unregistered businesses unviable.
  

ISLAMABAD: With only over 105 retailers enrolled in the ongoing Tajir Dost scheme, the FBR is considering various options to scrap the Non-Active Tax List (Non-ATL) and levy exorbitant rate of 10-15% on sale to unregistered retailers.

The FBR is looking at various options to make unregistered businesses unviable instead of going after 3.6 million retailers in the country.

It can only be done by drastic administrative measures.

Therefore, options are being considered to levy an extremely exorbitant rate on sale of goods at the wholesaler/distributor stage of 10 to 15% along with submission of Computerized National Identity Cards (CNIC) for all buyers of bulk goods.

If this scheme of things is approved at the political level, retailers without entering the tax net will not be able to operate their businesses as commercially viable.

“The FBR is preparing plans to present an idea before Finance Minister Muhammad Aurangzeb and if he gives his nod, the FBR may propose changes in tax laws on the eve of the upcoming budget 2024-25,” top official sources confirmed while speaking to The news here on Wednesday.

Registrations for the current Tajir Dost program will end on April 30, 2024.

As per Section 236G of the Income Tax Act, there is a withholding tax of 0.1% on sales to distributors, dealers and wholesalers under the Active Taxpayer List (ATL) and there is 0.5% on non-ATL.

Under section 236H, there is advance payment of sales tax to retailers. there is a 0.5% upfront tax for ATL retailers and a 1% tax for non-ATL retailers.

It is now under consideration to maintain withholding tax at the same rates for ATL sold to distributors, dealers and wholesalers, while the tax on non-ATL may vary from 10 to 15%.

The same will be implemented under section 236H where the rate of ATL taxpayers will remain the same while for non-ATLs, the rate is proposed to be increased by up to 10 to 15%.

Official FBR data shows that around 0.5 million traders, distributors, wholesalers and retailers exist under both provisions of the tax laws in the form of ATL and non-ATL.

Now it is also proposed to make the CNIC requirement mandatory for all manufacturers and across the supply chain so that non-registered ones are penalized with higher input tax withholding rate.

Originally published on The news