LETTER FROM MUHAMMAD SHAHID BAIG, ADVOCATE, LAHORE TO THE CHAIRMAN, CENTRAL BOARD OF REVENUE

LETTER FROM MUHAMMAD SHAHID BAIG, ADVOCATE, LAHORE TO THE CHAIRMAN, CENTRAL BOARD OF REVENUE <!--[if gte mso 10]> LETTER FROM MUHAMMAD SHAHID BAIG, ADVOCATE, LAHORE TO THE CHAIRMAN, CENTRAL BOARD OF REVENUE (Re: Request for clarification regarding definition of "retailers") [10th August, 2005] The Chairman, Central Board of Revenue, Revenue Division, Government of Pakistan, Islamabad. SUBJECT: REQUEST FOR CLARIFICATION REGARDING DEFINITION OF "RETAILERS" Respected Sir, This refers to the above subject. As per newly-added section i.e. 113A of the Income Tax Ordinance, 2001 (Added by Finance Act, 2004) "Retailers" having turnover up to Rs.5 (M) have been given option to pay Turnover Tax @ 0.75% being their Final Tax liability. "Retailers" have been defined as under:--- Section 113A(2)(a) "Retailer means a person selling goods to general public for the purpose of consumption" Whereas the word "turnover" has been defined in the following words---‑ Section 113(3) "In this section "turnover means" (a) the gross receipts, exclusive of [sales tax and central excise duty or] any trade discounts shown on invoices or bills, derived from the sale of goods; (b) the gross fees for the rendering of service [or giving benefits], including commissions; (c) the gross receipts from the execution of contracts; and (d) the company's share of the amounts stated above of any association of persons of which the company is a member. Apart from above, C.B.R.'s Circular No.9 of 2004 i.e. 4(32)ITP/2004(S-1.13A) dated 1-9-2004 explains the term in the following words:--‑ "The matter has been considered in the Board and it is explained that all persons selling goods to general public for consumption including manufactures /dealers, distributors and such like others having turnover upto five millions, are entitled to avail the benefit of the provisions of section 113A of the Ordinance." Although the above circular has been issued by C.B.R. to include Manufacturers, Dealers and Distributors in the definition of retailers so that they could opt for paying Turnover Tax @ 0.75% being their final tax liability but the relevant law in the statute book viz. section 113A(2)(a) is yet unamended. You are therefore requested to please confirm, whether above definition of retailers is still intact so that manufacturers, Dealers and Distributors could also pay tax under this scheme. Further, it appears from the above definitions that those rendering services to the general public against fees/receipts also fall within the definition of "retailer". Your good-self may appreciate that following categories of persons, among others are also rendering services to the general public. Hotels, Guest Houses Marriage Halls Workshops, Printers. Architects & Engineers Educational Institutions Property Dealers Fashion Designers Photographers Beauty Parlors Car dealers Drycleaners. You are requested to clarify, whether or not above service provi ders along with others fall in the definition of "retailer. You are also requested to clarify whether or not those engaged in retail sale vis-a-vis other business can also avail this scheme to the extent of their retail sale. An early consideration is deeply requested so that concerned Tax Payers could be benefited from the newly-promulgated law. ***