In case of filer/NTN holder traders, the fixed amount of Rs 30,000 as tax has been introduced for this category of traders, who failed to pay any tax in the last filed income tax return. The minimum amount of tax of Rs 30,000 has to be paid by such traders, official explained.
Under the Income Tax (Amendment) Act, 2016, the Federal Board of Revenue (FBR) has defined two types of traders. The first category covers traders who have not filed a return of income during any of the previous ten tax years before December 31, 2015. The second category cover traders who is a filer or NTN holder and a non-filer but has filed any return during previous ten tax years.
For non-filer traders, tax at the rate of 1 percent on working capital shall be payable on profits and gains from trading activity, provided that working capital shall not exceed Rs 50 million. In case the working capital is more than Rs 50 million, the person shall be taxed in the normal manner.
As per VTCS, for tax year 2016 tax based on turnover during the year, at the rates specified rates shall be payable provided that the turnover declared shall be at least three times the working capital declared during 2015. For tax years 2017 and 2018 the trader shall declare turnover on which tax paid is at least twenty-five per cent more than the tax paid for the preceding tax year.
Under the specified slabs for non-filers, where turnover does not exceed Rs 50 million, the rate of tax would be 0.2 percent; where turnover exceeds Rs 50 million but does not exceed Rs 250 million, tax would be Rs 100,000 plus 0.15 percent of the turnover exceeding Rs 50 million and where turnover exceeds Rs 250 million, tax rate would be Rs 400,000 plus 0.1 percent of the turnover exceeding Rs 50 million.
For traders covered under the second category (filer/NTN holder), tax shall be payable at higher of following: 25 percent more than tax paid for tax year 2014 or for latest tax year for which return has been filed on the basis of taxable income; turnover based tax at rates specified or Rs 30,000. For Tax Year 2016 to 2018, tax shall be payable at higher of following: 25 percent more than tax paid for tax year 2015 on the basis of taxable income; or turnover based tax.
As per scheme, traders who have already filed return for tax year 2015 before due date may file a revised return provided that the tax payable is at least 10 percent higher than the tax paid as per original return. Approval of Commissioner for such revision shall not be required.
The VTCS said that the traders deriving income other than from trading activities chargeable under the head "income from business", profit on debt, dividend and income from property shall not qualify under this Schedule. The provisions of sections 177 and 214C shall not apply to a trader qualifying under this Schedule, for tax years 2015 to 2018.
Trader qualifying under Part I of this Schedule shall file a return as specified in Form 'A" of rule 17 of this Part and trader qualifying under Part II of this Schedule shall file a return as prescribed under the Income Tax Rules, 2002. A trader qualifying under this Schedule shall not be entitled to claim any adjustment of withholding tax collected or deducted under the Ordinance, against tax payable in respect of profits and gains relating to trading activity.
A trader qualifying under this Schedule shall not be entitled to claim any adjustment of refund due against tax payable under rule 2 or 3 of Part I or rule 1, 3, or 4 of Part II.
A trader qualifying under this Schedule shall be entitled to claim adjustment of withholding tax collected or deducted under sections 150, 151 and 155 against tax payable in respect of income under section 5, 7B and 15 respectively.
If a trader fails to furnish a return for any of the tax years 2016, 2017 or 2018 after having furnished a return for tax year 2015 shall not qualify under this Schedule for any of the tax years 2015 to 2018 notwithstanding the fact that the return for tax year 2015 stood qualified under this Schedule at the time of furnishing of such return and all the provisions of the Ordinance shall apply.
Where it is subsequently discovered by the Commissioner that the trader was not eligible to be qualified under this Schedule or became ineligible to be qualified under this Schedule during any time between tax years 2015 to 2018 due to non-payment of tax or filing of return or otherwise, the trader shall be treated to have exercised the option to be assessed under the provisions of this Ordinance, other than this Schedule and all the provisions of the Ordinance shall apply accordingly, Income Tax (Amendment) Act, 2016 added.