FBR retailers scheme draws only 220 new shopkeepers; fines of up to Rs 50,000 next

The government's simplified tax scheme for shopkeepers has drawn just 220 new filers, even though the Federal Board of Revenue (FBR) has identified 3.6 million potential non-filers in the retail sector, ProPakistani reported on Sunday, citing sources.

In all, about 1,750 shopkeepers have filed returns under the new fixed tax scheme, and most of them were already in the tax net. The scheme was meant to bring in Rs 50 billion from retailers. In early October the count of new retailers was 91, so the pace has picked up only slightly.

What happens to shopkeepers who stay out

The FBR plans to geo-tag markets across the country, building on its earlier mapping of markets and shops, and to fine those who do not register:

It also has the power to seal the shop of a retailer who stays outside the net.

Why the FBR is pushing now

The tax authority is short of its targets. It collected Rs 975 billion in the first 30 days of October against a monthly target of Rs 1,132 billion, a gap of Rs 157 billion. For July to October it collected Rs 4,058.5 billion against Rs 4,185 billion, a shortfall of Rs 126.5 billion. The FBR received 7.6 million income tax returns by October after extending the deadline twice.

When collections fall short, the usual fallback is more withholding tax on everyone else, from bank withdrawals to mobile top-ups, which is why the retail sector's tiny contribution matters to salaried people too.

If you run a shop

1. Check your status on the FBR's Active Taxpayer List. A non-filer pays higher withholding tax on almost everything; see our guide to withholding tax rates for filers and non-filers.
2. Register on IRIS if you are not a filer. Our step-by-step guide on how to become a filer covers it.
3. Compare the fixed scheme with a normal return. Small shops with low profit may pay less under the fixed amount; the income tax calculator gives you the normal-return figure for comparison.
4. Keep records of rent, electricity bills and purchases. They are what the FBR uses to judge a shop's turnover once markets are geo-tagged.