ISLAMABAD, Oct 23: The scheme of 0.75 per cent flat rate of income tax announced in the budget of 2004-05 for retailers whose turnover is less than Rs5 million largely failed to attract small retailers for filing their tax returns for the tax-year 2004.

Informed sources in the Central Board of Revenue (CBR) told Dawn on Saturday that mostly the big retailers who stood to benefit from this scheme filed their tax return under the scheme.

The government in the last budget decided to de-register around 42,000 retailers whose turnover was less than Rs5 million. Of these, retailers stood at 25,000 and manufacturer at 17,000. The government at the same time announced a flat rate of 0.75 per cent of income tax scheme for the small retailers who would not be subjected to any audit.

The sources said that retailers having sales up to Rs3 million, whose gross profit margin was 15 per cent and profit and loss expenses were one third of their gross profit were not attracted to the scheme of 0.75 per cent tax of retailers. There normal tax liability to be less than 0.75 per cent on their sales.

As a result, the small retailers could not avail this scheme, while the big retailers to whom this scheme was actually beneficial have availed it.

According to the data analysis available with Dawn, a retailer will have to pay tax of Rs1500 under normal income tax on his total turnover of Rs100,000. But if he opted for the 0.75 per cent scheme, he would have to pay Rs7500 on the same turnover. Similarly on turnover of Rs1,500,000, the normal tax was Rs5,250, while the tax under the 0.75 per cent scheme was Rs112,50; on turnover of Rs2,000,000, the normal tax was Rs11,500 and Rs15,000 under the scheme; on turnover of Rs2,500,000 the normal tax was Rs17,750 and Rs18,750 under the scheme.

Further analysis of the data showed that retailers whose turnover was Rs3,000,000 their normal tax stood at Rs24,000 while the tax under the 0.75 per cent scheme stood at Rs22,500; on turnover of Rs3,500,000, the normal tax was Rs34,000 and Rs26,250 under the scheme; on turnover of Rs4,000,000 the normal tax stood at Rs44,000 and Rs30,000 under the scheme; on turnover of Rs4,500,000 the normal tax stood at Rs56,500 and Rs33,750 under the scheme and on turnover of Rs5,000,000, the normal tax was Rs69,000 and Rs37,500 under the scheme, respectively.

The data showed that the scheme announced for the registration of the small retailers was more attractive for the big retailers.

When contacted senior income tax officials who were not in a position to give exact numbers and analysis of the taxpayers availing the scheme for retailers.

They said that tax officials have started converting the data received through the returns form into the computer system for making further analysis. After that we would be in a position to tell about the scheme.