ISLAMABAD:The government has quietly expanded the scope of the traders’ scheme to include shops located in residential areas, as uncertainty looms over the approval of the $7 billion International Monetary Fund (IMF) programme due to a financing gap and ad-hoc relief for electricity consumers.
A few days ago, the federal government extended the retailers’ scheme to cover 100-square-foot shops in residential areas, which were previously exempt from the fixed income tax of Rs100 to Rs60,000 per month, according to government sources. This move was necessary to address IMF objections regarding the narrow base of the new scheme.
However, due to growing pressure from traders and the Jamaat-e-Islami, the government has kept this decision under wraps. The changes were made in the Tajir Dost Special Procedure notification to meet IMF concerns, said the sources.
The government has partially amended the exclusion clause from the notification, which exempted shops of 100 square feet or less located in a residential area from the scope of the new scheme. But the revised gazette notification has not been made public to avoid backlash.
Federal Board of Revenue (FBR) spokesperson Bakhtiar Muhammad did not reply to a request for comments.
A senior FBR official stated that the government would reveal the notification at a politically opportune time. He confirmed that traders doing business in residential areas have now been brought under the fixed income tax scheme.
Last month, the government implemented the new scheme for traders with the aim of collecting Rs50 billion during this fiscal year 2024-25. However, certain exclusions, mainly related to 100-square-foot shops and the Rs100 fixed rate on 50-square-foot commercial area shops, have made it challenging for the FBR to meet this target.
So far, around 62 traders have entered the tax net out of an estimated millions, contributing just Rs115,000 towards the Rs50 billion target. The government’s decision to expand the scheme quietly highlights its weakening political resolve to defend crucial economic decisions.
This development comes amid a lack of certainty about the holding of the IMF executive board meeting this month. Finance ministry sources indicated that efforts are being made to ensure the meeting takes place before the end of August, as announced by Finance Minister Muhammad Aurangzeb.
