The Federal Board of Revenue (FBR) has proposed a straightforward tax payment system for traders, shopkeepers, and retailers, utilizing a market/area-wise flat rate of tax (annual/monthly) based on the locality of shops in 42 cities across the country.
In this new system, the FBR has created valuation tables for markets in these cities, indicating estimated income, annual tax on that income, and monthly tax installments for traders. This system replaces the previous tax payment model based on square footage, opting instead for a flat rate based on the shop’s area.
Key Features of the New Tax System
- Flat Rate Tax Based on Area: The FBR will implement a simple flat rate tax system, moving away from calculating shop areas based on immovable property valuation tables.
- Categorization of Shops: Shops have been categorized into three types: high-end shops in prime/posh locations, medium-sized shops, and small shops in lower-income areas.
- Higher taxes for large shops in prime locations.
- Moderate taxes for medium-sized shops.
- Lower taxes for small shops in less affluent areas.
- Consultative Process: The draft lists have been shared with traders’ representatives for feedback. The FBR aims to finalize the tax payment scheme through this consultative process.
Tajir Dost Scheme: Registration Begins in 42 Cities
The FBR will hold meetings on Friday, July 12, between Regional Tax Offices (RTOs) and traders’ representatives in 42 cities to discuss the draft valuation tables. These discussions will focus on indicative incomes and the corresponding monthly tax installments. For example, if a trader’s annual income is estimated at Rs600,000, the annual tax would be Rs1,200, resulting in a monthly tax of Rs100. In other areas, monthly tax proposals range from Rs2,000 to Rs50,000, depending on the locality.
The final recommendations from these discussions will be submitted to the Board. The FBR is expected to issue final notifications by Monday next week.
