Caretaker govt aims to collect taxes from small shopkeepers

Following the International Monetary Fund's (IMF) rejection of a fixed scheme for retailers, the caretaker government has finalised the Tax Asaan Application to collect taxes from small shopkeepers based on FBR-determined valuations for each shop.

The retailer scheme is nearly finalised, and the caretaker government is expected to give the go-ahead to its launch before the stipulated time frame ends, possibly becoming effective from January 15, 2024, according to a media report.

While previous attempts to bring millions of retailers under a scheme failed, it remains to be seen how the caretaker government will implement this one.

The upcoming scheme for retailers encompasses 16 points, including small traders, shopkeepers, service providers, franchise stores, medical practitioners, hospitals, educational institutions, health clubs, saloons, marriage halls, boutiques, tailoring shops, designers, interior designers, event managers, legal practitioners, travel agents, restaurants, tea houses, and Pakwan centers.

FBR-determined shop valuations will be utilized for tax imposition.

The government plans to introduce a convenient installment plan spanning up to 12 installments, along with a 25% tax relief for newly registered individuals. Relief from year-end tax payments and hassle-free payment options through Jazz Cash, Easypaisa, etc., are included. Additionally, consultants using "The Tax Assan App" will not incur fees, and tax payments are scheduled for the 15th of each month.

The report said that the caretaker government doesn't require new legislation for enacting this tax scheme, as the existing law empowers the FBR to introduce such schemes under sections 99C and 99B of the Income Tax law, as approved by Parliament.

The decision to face pressure from shopkeepers or abandon plans to bring all sectors into the tax net remains uncertain. The proposed scheme for small shopkeepers, including its media campaign, is almost finalized and can be launched upon caretaker approval.