ByFBR Levies Turnover Tax on Subsidy
The Federal Board of Revenue (FBR) has imposed a 1.25% turnover tax on the subsidy provided to utility stores. This new tax measure is expected to generate approximately Rs. 1 billion in revenue for the government.
Turnover Tax Defined
A turnover tax is a tax levied on a company’s overall revenue or sales, rather than on its profits. It is often used as a simplified method of taxation for small businesses.
Controversy Surrounding the Decision
The imposition of the tax has sparked controversy, with the Utility Stores Corporation (USC) expressing its concerns. The FBR and the USC have a history of disagreements over tax matters, with the FBR previously attaching the USC’s accounts to recover dues.
Impact on Relief Package
Despite the new tax, the USC has clarified that the government’s relief package on essential items remains in place. There will be no price hikes for consumers, and the subsidy will continue for beneficiaries of the Benazir Income Support Program.
Government’s Fiscal Strategy
The government has allocated a total of Rs. 65 billion for relief packages, including the Prime Minister’s Relief Package and the Ramadan Relief Package. The imposition of the turnover tax on the utility store subsidy is part of the government’s broader strategy to increase revenue collection.
