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This blog is written by Mr. Sharif Uddin Khilji, FCA. Please read this blog and provide your valued comments.

Ten (10) Key points of Fixed Tax Scheme for small shopkeepers

FBR has issued draft of two schemes, one for small shop keepers and one for traders other than small shop keepers. In this blog we’ll discuss the draft scheme for small shopkeepers under section 99B of Income Tax Ordinance, 2001. The ten key points of draft scheme for small shopkeepers are as under:

  1. The scheme applies to small shopkeepers and is meant for individuals only however the scheme is optional not mandatory.
  2. The individual carrying out business at premises having covered area of less than 300 square feet is treated as a small shop keeper.
  3. The scheme is not applicable on jeweler, wholesaler, real estate agent, builder & developer, doctor, lawyer, chartered accountant or any other category specified by Board, a retailer operating as a unit of a national or international chain of stores, a retailer operating in an air-conditioned shopping mall, plaza or center, a retailer who has a credit or debit machine card, any person whose cumulative electricity bill exceeds Rs.300,000 in the immediately preceding 12 months and any person covered under scheme for traders under section 99C of Income Tax Ordinance, 2001.
  4. The scheme provides for “category A of small shopkeepers” and “other than category A of small shopkeepers” whereby category A shopkeepers are those where value of shop exceeds Rs.10,000 per square foot as per FBR valuation table or DC rate whichever is higher as applicable.
  5. The tax rate prescribed is higher of 2% of turnover or fixed rate ranging from Rs.20,000 to Rs.50,000.
  6. The rule relating to “manner of payment of tax” appears to have incorrectly drafted. Apparently, it was meant to provide for payment of tax with return or in two equal installments whereby first installment is to be paid by September 30th and second installment is to be paid by December 31. However, the text of the relevant rule needs revision.
  7. No deduction of expenses, credit or refund is allowed to small shopkeepers.
  8. Immunity is given from audit or examination, unless so specified by the Board.
  9. Simplified return and wealth statement are prescribed.
  10. Small shopkeeper is not required to act as withholding agent.

Sharif ud din Khilji, FCA