In a federal cabinet meeting chaired by Caretaker Prime Minister Anwaarul Haq, the federal cabinet has given the green light to a simplified tax scheme aimed at taxing the indicative incomes of traders, retailers, and specified individuals.
The proposal, part of the Federal Board of Revenue’s (FBR) restructuring plan, is expected to generate an additional revenue of Rs400 billion to Rs500 billion.
As per the approved scheme, indicative incomes will be estimated based on factors such as the location, value, and rent of shops.
A specialized mobile application named ‘Tajir Dost’ has already been developed to streamline the income calculation process, providing authorities with a tool to facilitate tax calculations.
The scheme, once implemented, will include online sales, with the FBR planning further amendments to encompass online retail businesses.
The indicative income for tax purposes will be set at three times the rental value, with taxes payable in 12 monthly installments. Proactive individuals filing tax returns before the first monthly installment can avail a 50% discount.
A tax official stated that the FBR would determine the rollout date of the new scheme and emphasized the inclusion of online retail businesses.
Currently, only 300,000 out of an estimated 3.5 million retailers actively file tax returns.
The newly proposed scheme aims to bring the remaining 3.2 million retailers, primarily in major cities, into the tax net, representing a significant step toward expanding the tax base and enhancing revenue collection.
In a parallel development, the cabinet has approved the FBR’s proposal to digitize withholding tax collection through the Synchronised Withholding Administration and Payment System (SWAPS).
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FBR may improve tax collection as cabinet approved