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The PTI government has entitled the Federal Board of Revenue (FBR) to collect taxes from the public to ensure a proper tax system in the country. With the recent changes in the tax system, traders, businessmen, and local people are finding it hard to maintain their businesses.
To cope up with the situation and to promote business in the country, the FBR has introduced three schemes for traders, business, and small shopkeepers under the names Simplified Scheme for Traders, Small Shopkeepers Scheme, and Business License Scheme.
The FBR new tax policy 2019 aims to get as many people as they can under the tax net including small shopkeepers and local people. The current number of small businesses that fall under the tax net is nothing as compared to the businesses that are running in the country. The new schemes introduced by FBR are likely to make the tax requirements easier for traders and shopkeepers.
The FBR is approaching stakeholders to record their stance on the subject so they can proceed to present the schemes before the cabinet for final approval. The schemes introduced by the FBR are as follows:
Simplified Scheme for Traders
The FBR introduced this scheme after carefully conducting detailed and thorough research on the tax regimen followed by traders. Many traders were also interviewed to get sufficient information from them and identify the challenges they face while filing tax. With the new information, the FBR has tried to overcome the negative side of the tax filing process.
The Simplified Scheme for Traders is only applicable to those traders that have self-invested equity below Rs. 50 million, five or below five employees, turnover of less than Rs. 50 million, and fixed assets of Rs. 100 million.
The scheme does not apply to those people that are involved in the Small Shopkeepers Scheme.
The main flexibility that is given to tax-filers through this scheme is that they are no longer subjected to any audit. In addition, the tax-filers do not have to do record-keeping and they can present the receipts minus expenditure to the FBR to show their income.
Apart from these advantages, a friendly online system for tax registration has also been introduced under this scheme. The non-registered traders can register as tax-filers by filling the form on the Integrated Risk Information System (Iris) available on the FBR website.
The FBR tax 2019 rates are according to division 1, part I of the First Schedule of the Income Tax Ordinance, 2001.
FBR Small Shopkeepers Tax Scheme 2019
Under the Special Procedure for Payment of Taxes, a small shopkeeper is the one that operates a business within 300 sq. feet area.
The tax scheme for shopkeepers 2019 by FBR is aimed to make tax-registration and tax-filing easier. The definition of a shopkeeper under Special Procedure of Payment of Taxes does not include retailers with an air-conditioned shop, dentist, jeweler and much more as mentioned in the list by the FBR.
In addition, those retailers that have debit/credit card machine, whose cumulative electricity bill for last 12 months crosses Rs. 300,000 and people included in the Section 99C of the Income Tax Ordinance, 2001 are excluded from this scheme.
The tax on small businesses is to be paid in two installments in a year and will be 2% of the turnover or fixed tax rates as suggested by the FBR. The tax rates 2019 will be:
- If the shop operates within 150 sq. feet and is in the A area then the tax rate will be Rs. 35, 000.
- If the shop operates within 300 sq. feet and is in the A area then the tax rate will be Rs. 40, 000.
- If the shop operates within 150 sq. feet and is in any area other than the A area then the tax rate will be Rs. 20, 000.
- If the shop operates within 300 sq. feet and is in any area other than the A area then the tax rate will be Rs. 25, 000.
This small traders tax 2019 will not require any audit. After the fixed tax for small retailers is paid, the shopkeeper will receive a sticker and he would have to submit a one-page return form in an authorized bank by the FBR.
Business License Scheme
Registration of businesses takes plenty of time in Pakistan and therefore, businessmen often runs away from registering their businesses. The FBR plans to introduce amendments in the Income Tax Rules, 2002 to make the registration easier for the businesses.
The FBR has made it quite clear that registration of every business running in the country is mandatory. To make this happen, the amendments have given sufficient flexibility to the tax-filers to boost the tax system in the country.
Now, to register as a tax-filer, the scheme allows the person to fill the form to get the license issued. Iris is one platform from where the form can be filled or through any other software that is authorized by the FBR.
The tax-registration only requires a cell-phone and a decent internet connection to go through the procedure. In case you are someone that has no internet connection or cell-phone number then you can provide your details in a Kiosk by the Regional Tax Office. You can also contact the service providers that have an internet connection for the registration.
Verification of the documents will be conducted by the FBR along with biometric verification of the tax-filer. Once the verification is completed, the person will be issued a system-generated printout of the license.
The business tax 2019 FBR includes tax-payers who have submitted their returns and are in the Active Taxpayers List (ATL) will be considered as the application filer. These individuals will also be given a system-generated license through email.
The schemes introduced by the FBR are expected to give some relief to the tax-payers and ease the process of registration. No auditing can turn into great flexibility for the tax-payers and have the capability of boosting the tax system in Pakistan.