Govt is desperate. But the bills for the loans that the govt took plus the interest will far exceed the taxes they can collect from this 3rd world economy. Tick tock. Math doesn't look so good for the govt. Perhaps money printing is the answer. Or maybe cutting salaries of their own
Govt should increase tax on banks as money goes to banks at the end after spending by all sectors of society .It will decrease risk of passing of burden of tax on common man.Similarly govt should impose witholding tax on retailers or traders when they buy goods from suppliers,producers or importers and povide low rates of witholding tax for those traders who become filers.Similarly govt should give exemptions to traders or retailers/ shopkeepers who sell local goods instead of imported goods.It will help to decrease import of unnecessary items and will promote local production of goods.I think this will be much better approach to deal with current problem than what policy govt is adopting regarding forceful registration and requisition of cnic for buying and selling by traders
I would like to draw attention to the Zakat deductions by banks.
Zakat is only deducted from Muslims, but other faiths have exemption from it.
This should not be the case, non-Muslim faiths shall be forced to pay equivalent amount if not higher, that may not be called Zakat but something else.
Just check the account histories of Pakistani banks and expose those so called minorities, who other wise claim are subjected to genocide by Pakistani state.
Here is another genius. Dude business pass on all indirect taxes to consumers, the common man who buys goods/services bear theses indirect taxes not the businesses.
Just because you are paying utility bills doesn't mean you are exempt from other taxes. Salaried folks pay taxes as well. Its not a matter of your choice that which tax your highness would like to pay or not.
Just because you are paying utility bills doesn't mean you are exempt from other taxes. Salaried folks pay taxes as well. Its not a matter of your choice that which tax your highness would like to pay or not.
From his posts, it's clear that Income Tax concept is alien to his highness (In case he is earning, or his father in case he is still dependent), as they aren't used to pay due taxes so settling with norms of 21st century will be little difficult for such kind of people but they have to eventually reconcile with reality or move out of Pakistan and start paying higher taxes to government of some other country (Where they will not even dare to speak about it). But anyway, I hope government don't get blackmailed by tax evaders and resort to more indirect taxes like past, let them go on strike, I know economy and state will suffer for sometime but so will the thieves.
Here is another genius. Dude business pass on all indirect taxes to consumers, the common man who buys goods/services bear theses indirect taxes not the businesses.
From his posts, it's clear that Income Tax concept is alien to his highness (In case he is earning, or his father in case he is still dependent), as they aren't used to pay due taxes so settling with norms of 21st century will be little difficult for such kind of people but they have to eventually reconcile with reality or move out of Pakistan and start paying higher taxes to government of some other country (Where they will not even dare to speak about it). But anyway, I hope government don't get blackmailed by tax evaders and resort to more indirect taxes like past, let them go on strike, I know economy and state will suffer for sometime but so will the thieves.
- Been following your posts since yesterday. It's obvious that the perception of the salaried/students regarding the normal business folk is that of a Seith Sahib who earns (has profits) in upwards of 100,000 a day. Yes there is a class of business folk out there that can manage to earn such profits, however the number of such businesses is almost the same as the number of salaried class earning 10,00,000 a month. So judging every business owner in Pakistan by the "Seith Sahib Standard" is just plain ridiculous.
- Secondly, the problem is not of paying the taxes. The problem is of the tax system being complex to a point where it makes your head spin. The majority of the business class is illiterate. These are people who basically inherited their businesses from their fathers, and have spend their lives on their shops since the time they passed 7th class. In Pakistan we have the traditional distribution system for products, so you have following;
The producer ----> The Distributor ----> The Whole seller ----> The Retailer ----> The Consumer
Just look at the most simplest GST calculation possible of a product costing Rs. 90 to the producer, with 10% profit margins at every intermediary and 17% GST. To simplify it further the withholding tax which would be charged on every intermediary wasn't even considered. I again stress, that this is probably the SIMPLEST GST calculation that there could be.
Producer:-
Produces something at 90, and wants to sale it at Rs. 100. A distributor approaches and agrees to buy at Rs. 100, with the GST in play the distributor has to pay Rs. 117 and the producer deposits Rs. 17 to the Government. Distributor:-
Input tax: 17% at 100 = 17
Cost of the product: 117 (incl tax)
Profit to be charged at the product: 10% = 11.7
Sale Price: 128.7
Output tax: 17% at 128.7 = 21.879
Amount being charged from the wholeseller: 150.579
Tax due: Output tax – Input tax = 21.879-17 = 4.879 to be deposited by the distributor. The rest will be transferred to the next intermediary.
Wholeseller :-
Input Tax: 17% at 128.79 = 21.879
Cost of the product: 150.579 (incl tax)
Profit to be charged at the product: 10% = 15.05
Sale Price: 165.629
Output Tax: 17% at 165.629 = 28.15
Amount being charged from the retailer: 193.779
Tax due: Output tax – Input Tax: = 28.15-21.879 = 6.27 to be deposited by the wholeseller.
The rest will be transferred to the next intermediary.
Retailer:-
Input Tax: 17% at 165.629 = 28.15
Cost of the product: 193.779 (incl tax)
Profit to be charged at the product: 10% = 19.3779
Sale Price: 213.15
Output Tax: 17% at 213.15 = 36.2
Tax due: Output tax – Input tax = 36.2-28.15 = 8.08 to be deposited by the retailer.
The rest will be transferred to the next intermediary.
COST TO THE CONSUMERS: 249.35
Conclusion: A product that costed Rs. 90 to the producer will cost Rs. 250 to the consumer. Now, include the with holding tax at every intermediary, and multiply these calculations with the numbers of items each shop has, something that even karyana stores have in the 100's and you can see why the traders protest that the current system is too complex.
-Thirdly, for the ones that are saying that "Ohh these tax thieves just have to pass on the tax on to the consumer. It's just so simple". For the answer to that argument you would have to look inward, and ask aren't we the ones that go out and throw our weight around " Nahi jee yei 300 ki chez nahi hai, mei 150 sai aik rupiya ziada nahi doun ga iska". I just showed you how a product starting at Rs. 90 would cost you, the consumer Rs. 250 by the time it reaches you. With increased prices the demands of goods will fall, and then us consumers will be the same ones that will call the businesses thieves and loteras.
-Fourthly, please do mention where in the world do you need a valid CNIC to shop? I've no arguments in government tracking the purchases so that it can identify a money trail. But why does a business have to be the one documenting the consumer purchases, maintaining a whole file worth of CNIC copies across a whole financial year and risking persecution if any copy goes missing etc. A simpler way is to track credit/debit card purchases where a business has to do nothing additional and the government can still get a money trail.
-Fifthly, majority of the businesses operating in Pakistan are SME's. These are businesses with very limited human resource and investment. They are literally 90% of the total businesses operating in Pakistan, employing nearly 80% of the non agricultural labor force of Pakistan. The measures the govt wants implemented represents an increase in cost of doing business, and the way that businesses shed such costs is by cutting jobs. So your basically looking at a hike in unemployment from a source that employs nearly 80% of the non-agricultural labor force.
-Lastly, for people saying let's burn a couple markets if they don't open or auction their shops off, suggestions that I've been reading since yesterday. Here is a question for my PTI friends (since I also voted PTI this past election) ... Isn't registering a peaceful protest by shutting down one's own business, come under the umbrella of freedom of speech? You might not remember this or might not like to remember this ... but that doesn't mean it didn't happen...
Here is another genius. Dude business pass on all indirect taxes to consumers, the common man who buys goods/services bear theses indirect taxes not the businesses.
No they don't. Imran Khan takes all the money and sends it directly to his Jewish ex wife. The rest he spends on Jewish cocaine and anti Jewish taweez from his peerni wife.
Look I said Jewish 3 times - take me more seriously than zaid Hamid.
-Fourthly, please do mention where in the world do you need a valid CNIC to shop? I've no arguments in government tracking the purchases so that it can identify a money trail. But why does a business have to be the one documenting the consumer purchases, maintaining a whole file worth of CNIC copies across a whole financial year and risking persecution if any copy goes missing etc. A simpler way is to track credit/debit card purchases where a business has to do nothing additional and the government can still get a money trail.
This clause is the most idiotic thing I have seen. This is just pure laziness by the FBR, they are just relieving themselves of the responsibility and passing the burden onwards.
Here is another genius. Dude business pass on all indirect taxes to consumers, the common man who buys goods/services bear theses indirect taxes not the businesses.
No they don't. Imran Khan takes all the money and sends it directly to his Jewish ex wife. The rest he spends on Jewish cocaine and anti Jewish taweez from his peerni wife.
Look I said Jewish 3 times - take me more seriously than zaid Hamid.
- Been following your posts since yesterday. It's obvious that the perception of the salaried/students regarding the normal business folk is that of a Seith Sahib who earns (has profits) in upwards of 100,000 a day. Yes there is a class of business folk out there that can manage to earn such profits, however the number of such businesses is almost the same as the number of salaried class earning 10,00,000 a month. So judging every business owner in Pakistan by the "Seith Sahib Standard" is just plain ridiculous.
- Secondly, the problem is not of paying the taxes. The problem is of the tax system being complex to a point where it makes your head spin. The majority of the business class is illiterate. These are people who basically inherited their businesses from their fathers, and have spend their lives on their shops since the time they passed 7th class. In Pakistan we have the traditional distribution system for products, so you have following;
The producer ----> The Distributor ----> The Whole seller ----> The Retailer ----> The Consumer
Just look at the most simplest GST calculation possible of a product costing Rs. 90 to the producer, with 10% profit margins at every intermediary and 17% GST. To simplify it further the withholding tax which would be charged on every intermediary wasn't even considered. I again stress, that this is probably the SIMPLEST GST calculation that there could be.
Producer:-
Produces something at 90, and wants to sale it at Rs. 100. A distributor approaches and agrees to buy at Rs. 100, with the GST in play the distributor has to pay Rs. 117 and the producer deposits Rs. 17 to the Government. Distributor:-
Input tax: 17% at 100 = 17
Cost of the product: 117 (incl tax)
Profit to be charged at the product: 10% = 11.7
Sale Price: 128.7
Output tax: 17% at 128.7 = 21.879
Amount being charged from the wholeseller: 150.579
Tax due: Output tax – Input tax = 21.879-17 = 4.879 to be deposited by the distributor. The rest will be transferred to the next intermediary.
Wholeseller :-
Input Tax: 17% at 128.79 = 21.879
Cost of the product: 150.579 (incl tax)
Profit to be charged at the product: 10% = 15.05
Sale Price: 165.629
Output Tax: 17% at 165.629 = 28.15
Amount being charged from the retailer: 193.779
Tax due: Output tax – Input Tax: = 28.15-21.879 = 6.27 to be deposited by the wholeseller.
The rest will be transferred to the next intermediary.
Retailer:-
Input Tax: 17% at 165.629 = 28.15
Cost of the product: 193.779 (incl tax)
Profit to be charged at the product: 10% = 19.3779
Sale Price: 213.15
Output Tax: 17% at 213.15 = 36.2
Tax due: Output tax – Input tax = 36.2-28.15 = 8.08 to be deposited by the retailer.
The rest will be transferred to the next intermediary.
COST TO THE CONSUMERS: 249.35
Conclusion: A product that costed Rs. 90 to the producer will cost Rs. 250 to the consumer. Now, include the with holding tax at every intermediary, and multiply these calculations with the numbers of items each shop has, something that even karyana stores have in the 100's and you can see why the traders protest that the current system is too complex.
-Thirdly, for the ones that are saying that "Ohh these tax thieves just have to pass on the tax on to the consumer. It's just so simple". For the answer to that argument you would have to look inward, and ask aren't we the ones that go out and throw our weight around " Nahi jee yei 300 ki chez nahi hai, mei 150 sai aik rupiya ziada nahi doun ga iska". I just showed you how a product starting at Rs. 90 would cost you, the consumer Rs. 250 by the time it reaches you. With increased prices the demands of goods will fall, and then us consumers will be the same ones that will call the businesses thieves and loteras.
-Fourthly, please do mention where in the world do you need a valid CNIC to shop? I've no arguments in government tracking the purchases so that it can identify a money trail. But why does a business have to be the one documenting the consumer purchases, maintaining a whole file worth of CNIC copies across a whole financial year and risking persecution if any copy goes missing etc. A simpler way is to track credit/debit card purchases where a business has to do nothing additional and the government can still get a money trail.
-Fifthly, majority of the businesses operating in Pakistan are SME's. These are businesses with very limited human resource and investment. They are literally 90% of the total businesses operating in Pakistan, employing nearly 80% of the non agricultural labor force of Pakistan. The measures the govt wants implemented represents an increase in cost of doing business, and the way that businesses shed such costs is by cutting jobs. So your basically looking at a hike in unemployment from a source that employs nearly 80% of the non-agricultural labor force.
-Lastly, for people saying let's burn a couple markets if they don't open or auction their shops off, suggestions that I've been reading since yesterday. Here is a question for my PTI friends (since I also voted PTI this past election) ... Isn't registering a peaceful protest by shutting down one's own business, come under the umbrella of freedom of speech? You might not remember this or might not like to remember this ... but that doesn't mean it didn't happen...
- Been following your posts since yesterday. It's obvious that the perception of the salaried/students regarding the normal business folk is that of a Seith Sahib who earns (has profits) in upwards of 100,000 a day. Yes there is a class of business folk out there that can manage to earn such profits, however the number of such businesses is almost the same as the number of salaried class earning 10,00,000 a month. So judging every business owner in Pakistan by the "Seith Sahib Standard" is just plain ridiculous.
- Secondly, the problem is not of paying the taxes. The problem is of the tax system being complex to a point where it makes your head spin. The majority of the business class is illiterate. These are people who basically inherited their businesses from their fathers, and have spend their lives on their shops since the time they passed 7th class. In Pakistan we have the traditional distribution system for products, so you have following;
The producer ----> The Distributor ----> The Whole seller ----> The Retailer ----> The Consumer
Just look at the most simplest GST calculation possible of a product costing Rs. 90 to the producer, with 10% profit margins at every intermediary and 17% GST. To simplify it further the withholding tax which would be charged on every intermediary wasn't even considered. I again stress, that this is probably the SIMPLEST GST calculation that there could be.
Producer:-
Produces something at 90, and wants to sale it at Rs. 100. A distributor approaches and agrees to buy at Rs. 100, with the GST in play the distributor has to pay Rs. 117 and the producer deposits Rs. 17 to the Government. Distributor:-
Input tax: 17% at 100 = 17
Cost of the product: 117 (incl tax)
Profit to be charged at the product: 10% = 11.7
Sale Price: 128.7
Output tax: 17% at 128.7 = 21.879
Amount being charged from the wholeseller: 150.579
Tax due: Output tax – Input tax = 21.879-17 = 4.879 to be deposited by the distributor. The rest will be transferred to the next intermediary.
Wholeseller :-
Input Tax: 17% at 128.79 = 21.879
Cost of the product: 150.579 (incl tax)
Profit to be charged at the product: 10% = 15.05
Sale Price: 165.629
Output Tax: 17% at 165.629 = 28.15
Amount being charged from the retailer: 193.779
Tax due: Output tax – Input Tax: = 28.15-21.879 = 6.27 to be deposited by the wholeseller.
The rest will be transferred to the next intermediary.
Retailer:-
Input Tax: 17% at 165.629 = 28.15
Cost of the product: 193.779 (incl tax)
Profit to be charged at the product: 10% = 19.3779
Sale Price: 213.15
Output Tax: 17% at 213.15 = 36.2
Tax due: Output tax – Input tax = 36.2-28.15 = 8.08 to be deposited by the retailer.
The rest will be transferred to the next intermediary.
COST TO THE CONSUMERS: 249.35
Conclusion: A product that costed Rs. 90 to the producer will cost Rs. 250 to the consumer. Now, include the with holding tax at every intermediary, and multiply these calculations with the numbers of items each shop has, something that even karyana stores have in the 100's and you can see why the traders protest that the current system is too complex.
-Thirdly, for the ones that are saying that "Ohh these tax thieves just have to pass on the tax on to the consumer. It's just so simple". For the answer to that argument you would have to look inward, and ask aren't we the ones that go out and throw our weight around " Nahi jee yei 300 ki chez nahi hai, mei 150 sai aik rupiya ziada nahi doun ga iska". I just showed you how a product starting at Rs. 90 would cost you, the consumer Rs. 250 by the time it reaches you. With increased prices the demands of goods will fall, and then us consumers will be the same ones that will call the businesses thieves and loteras.
-Fourthly, please do mention where in the world do you need a valid CNIC to shop? I've no arguments in government tracking the purchases so that it can identify a money trail. But why does a business have to be the one documenting the consumer purchases, maintaining a whole file worth of CNIC copies across a whole financial year and risking persecution if any copy goes missing etc. A simpler way is to track credit/debit card purchases where a business has to do nothing additional and the government can still get a money trail.
-Fifthly, majority of the businesses operating in Pakistan are SME's. These are businesses with very limited human resource and investment. They are literally 90% of the total businesses operating in Pakistan, employing nearly 80% of the non agricultural labor force of Pakistan. The measures the govt wants implemented represents an increase in cost of doing business, and the way that businesses shed such costs is by cutting jobs. So your basically looking at a hike in unemployment from a source that employs nearly 80% of the non-agricultural labor force.
-Lastly, for people saying let's burn a couple markets if they don't open or auction their shops off, suggestions that I've been reading since yesterday. Here is a question for my PTI friends (since I also voted PTI this past election) ... Isn't registering a peaceful protest by shutting down one's own business, come under the umbrella of freedom of speech? You might not remember this or might not like to remember this ... but that doesn't mean it didn't happen...
1. Any steps taken to simplify the tax system are essential. The government should take measures to make it easier to pay tax, provide training on how to file tax returns and manage tax and provide support services to assist people in doing so. This should have been step 1 before demanding everyone pay up.
2. Obviously the only people eligible to pay tax are those who earn enough. Tax calculations will take into account costs and salaries etc. This is why book keeping is essential.
3. If people are too illiterate to keep thier books, they should hire someone else to. I read an article recently about the Taliban shadow government in Helmand province. A local commander was settling a dispute between a shopkeeper and a customer. The customer claimed he had been sold out of date biscuits. The shopkeeper claimed he was not at fault as he was illiterate and unable to tell. The dispute was settled by getting the customer a refund and instructing the shopkeeper to hire literate help.
4. Fixed prices. Put a sticker or tag on all items. The customer can buy or leave.
5. If they have till receipts for everything they can easily keep stock and log transactions. Most tills keep a copy of the receipt. Investing in epos systems would even help with accounting and may provide data to help improve business.
1. Any steps taken to simplify the tax system are essential. The government should take measures to make it easier to pay tax, provide training on how to file tax returns and manage tax and provide support services to assist people in doing so. This should have been step 1 before demanding everyone pay up.
2. Obviously the only people eligible to pay tax are those who earn enough. Tax calculations will take into account costs and salaries etc. This is why book keeping is essential.
3. If people are too illiterate to keep thier books, they should hire someone else to. I read an article recently about the Taliban shadow government in Helmand province. A local commander was settling a dispute between a shopkeeper and a customer. The customer claimed he had been sold out of date biscuits. The shopkeeper claimed he was not at fault as he was illiterate and unable to tell. The dispute was settled by getting the customer a refund and instructing the shopkeeper to hire literate help.
4. Fixed prices. Put a sticker or tag on all items. The customer can buy or leave.
5. If they have till receipts for everything they can easily keep stock and log transactions. Most tills keep a copy of the receipt. Investing in epos systems would even help with accounting and may provide data to help improve business.
I broadly agree with your point of view, the only problem I see however is that your arguing from the point of view of a business that can afford to invest in hiring an accountant, a business that can afford to go out and invest in completely overhauling its current business structure and practices, and has no problem in terms of investing in HRD (Human resource development) in training and development programs which allows for their Human Resource (HR) to understand the new business practices and be adept at using the new gadgetry. All that while prices are starting to increase resulting in lesser sales resulting in lesser profits.
Like I stated before, 90% of the enterprises in Pakistan classify as Small Medium Enterprises, they simply cannot afford this endeavor. The businesses and the government need to find a middle ground to this problem.
You can consider the following example which explains as to why putting on extra expenses is not feasible. An increase of cost of business will be translated in to a condition, where businesses will have to slash some jobs in order to make their ends meet, which is VERY DANGEROUS considering 80% of the non-agricultural labor force of Pakistan works for such enterprises.
Simply consider a kiryana store or a small business owner with a daily sale of say Rs. 15000 which by the way is a huge stretch if you consider your local kiryana store traders. Let's assume that he earns a profit of 20% on all his goods. He has a helper who he has employed at min. wage i.e. 17000. His Rent is around say 20,000. Even while we only consider the most direct expenses, his monthly income is (90,000 - Rent - HR expenses = 53,000) Assuming he hires a accountant at literally minimum wage, he still slashes his income to 36,000 rupees a month, while working 84 hour work weeks (12 hours a day, 7 days a week i.e. a total of 360 hrs a month).
Compare that with a salaried person by comparison who has a similar education background can earn a fixed income of 20,000 a month while working a 9 to 5 job. This salaried individual has to work 48 hour work weeks (8 hours a day, 6 days a week i.e. a total of 192 working hours).
An SME owner under such conditions earns: Rs. 100 per hour
Whilst a salaried individual earns: Rs. 104 per hour.
- Been following your posts since yesterday. It's obvious that the perception of the salaried/students regarding the normal business folk is that of a Seith Sahib who earns (has profits) in upwards of 100,000 a day. Yes there is a class of business folk out there that can manage to earn such profits, however the number of such businesses is almost the same as the number of salaried class earning 10,00,000 a month. So judging every business owner in Pakistan by the "Seith Sahib Standard" is just plain ridiculous.
First of all, I never claimed that every entrepreneur is making 100K/day profit. I only say that overwhelming majority of them don't pay their due taxes and their reluctance even to declare their customer buying 50K or more goods/services is itself proof, because doing so will also expose their on business volume not just of their customer who may be paying his/her taxes (or will come into radar if he/she is also tax evader). However, Just like government get taxes from salaried people, it should do same with non-salaried people, I guess any sensible person with little bit civility will agree that it's injustice that you impose more taxes on people who are already paying taxes but pull your pants down and bend in front of those who are evading taxes.
- Secondly, the problem is not of paying the taxes. The problem is of the tax system being complex to a point where it makes your head spin. The majority of the business class is illiterate. These are people who basically inherited their businesses from their fathers, and have spend their lives on their shops since the time they passed 7th class. In Pakistan we have the traditional distribution system for products, so you have following;
The producer ----> The Distributor ----> The Whole seller ----> The Retailer ----> The Consumer
Just look at the most simplest GST calculation possible of a product costing Rs. 90 to the producer, with 10% profit margins at every intermediary and 17% GST. To simplify it further the withholding tax which would be charged on every intermediary wasn't even considered. I again stress, that this is probably the SIMPLEST GST calculation that there could be.
Producer:-
Produces something at 90, and wants to sale it at Rs. 100. A distributor approaches and agrees to buy at Rs. 100, with the GST in play the distributor has to pay Rs. 117 and the producer deposits Rs. 17 to the Government. Distributor:-
Input tax: 17% at 100 = 17
Cost of the product: 117 (incl tax)
Profit to be charged at the product: 10% = 11.7
Sale Price: 128.7
Output tax: 17% at 128.7 = 21.879
Amount being charged from the wholeseller: 150.579
Tax due: Output tax – Input tax = 21.879-17 = 4.879 to be deposited by the distributor. The rest will be transferred to the next intermediary.
Wholeseller :-
Input Tax: 17% at 128.79 = 21.879
Cost of the product: 150.579 (incl tax)
Profit to be charged at the product: 10% = 15.05
Sale Price: 165.629
Output Tax: 17% at 165.629 = 28.15
Amount being charged from the retailer: 193.779
Tax due: Output tax – Input Tax: = 28.15-21.879 = 6.27 to be deposited by the wholeseller.
The rest will be transferred to the next intermediary.
Retailer:-
Input Tax: 17% at 165.629 = 28.15
Cost of the product: 193.779 (incl tax)
Profit to be charged at the product: 10% = 19.3779
Sale Price: 213.15
Output Tax: 17% at 213.15 = 36.2
Tax due: Output tax – Input tax = 36.2-28.15 = 8.08 to be deposited by the retailer.
The rest will be transferred to the next intermediary.
COST TO THE CONSUMERS: 249.35
Conclusion: A product that costed Rs. 90 to the producer will cost Rs. 250 to the consumer. Now, include the with holding tax at every intermediary, and multiply these calculations with the numbers of items each shop has, something that even karyana stores have in the 100's and you can see why the traders protest that the current system is too complex.
With all due respect, You are naive on GST issue. Below will be the calculation the scenario you took in your example
1. Producer
Cost of Goods Sold = 90, Base Price = 100 + 17% GST. (17 Rs. Charged and deposited to FBR, it's not from pocket of producer as he is passing it to distributor)
Profit 11.11%: Base Price - Cost = (100 - 90) = 10 <-- On these Rs. 10 he must pay income tax as it's his income
2. Distributor
Cost of Product = 100 + 17% GST Input, For 10% profit he have to sell at Base Price = 110 + 17% GST (128.7)
Additional Sales Tax to be charged and deposited to government (18.7 - 17) = 1.7 (it's not from pocket of distributor as he is passing it on to whole seller)
Profit 10%: Base Price - Cost = (110 - 100) = 10 <-- On these Rs. 10 he must pay income tax as it's his income
3. Whole Seller
Cost of Product = 110 + 17% GST Input, For 10% profit he have to sell at Base Price = 121 + 17% GST (141.57)
Additional Sales Tax to be charged and deposited to government (20.57 - 18.7) = 1.87 (it's not from pocket of whole seller as he is passing it on to retailer)
Profit 10%: Base Price - Cost = (121 - 110) = 11 <-- On these Rs. 11 he must pay income tax as it's his income
3. Retailer
Cost of Product = 121 + 17% GST Input, For 10% profit he have to sell at Base Price = 133.1 + 17% GST (155.73)
Additional Sales Tax to be charged and deposited to government (22.63 - 20.57) = 2.06 (it's not from pocket of retailer as he is merely passing it to Me the Mango Man)
Profit 10%: Base Price - Cost = (133.1 - 121) = 12.1 <-- On these Rs. 12.1 he must pay income tax as it's his income
Me the Mango Man have to pay 22.63 tax plus the tax I have already paid on my salary. But how much of these 22.63 reach into national kitty, are all those parties involved in chain have paid income tax on the profits they made from me? Can you answer it when most of these intermediaries are either not register, even if registered don't disclose their actual business volume? And withholding tax is advance income tax on these intermediaries which they should get adjust with their tax liability, for example if tax payable for intermediary (on his profits) is 100, he have paid 25 withholding taxes than net tax payable tax for him will be (100 - 25) = 75, but the cruelty is that they will pass on even those 25 Rs. to me the mango man. I hope, this will tell you why these intermediaries are protesting and don't want to declare their sales.
-Thirdly, for the ones that are saying that "Ohh these tax thieves just have to pass on the tax on to the consumer. It's just so simple". For the answer to that argument you would have to look inward, and ask aren't we the ones that go out and throw our weight around " Nahi jee yei 300 ki chez nahi hai, mei 150 sai aik rupiya ziada nahi doun ga iska". I just showed you how a product starting at Rs. 90 would cost you, the consumer Rs. 250 by the time it reaches you. With increased prices the demands of goods will fall, and then us consumers will be the same ones that will call the businesses thieves and loteras.
Dude, You don't even know the basics of taxation and how tax theft is being done and taunting others. For your kind information, bargaining is cultural, seller is from same society and already have built-in this factor in price he quotes first. The same seller will also be bargaining when role is reversed and he is buying something. It's idiotic point to begin with.
-Fifthly, majority of the businesses operating in Pakistan are SME's. These are businesses with very limited human resource and investment. They are literally 90% of the total businesses operating in Pakistan, employing nearly 80% of the non agricultural labor force of Pakistan. The measures the govt wants implemented represents an increase in cost of doing business, and the way that businesses shed such costs is by cutting jobs. So your basically looking at a hike in unemployment from a source that employs nearly 80% of the non-agricultural labor force.
I always said that FBR needs to be reformed, tax laws should be simple and straight forward. Will support any demand to make taxation and return filing easy. But being filtrate is no excuse of not paying due taxes.
-Lastly, for people saying let's burn a couple markets if they don't open or auction their shops off, suggestions that I've been reading since yesterday. Here is a question for my PTI friends (since I also voted PTI this past election) ... Isn't registering a peaceful protest by shutting down one's own business, come under the umbrella of freedom of speech? You might not remember this or might not like to remember this ... but that doesn't mean it didn't happen...
Government let them protest, keep their business shut for whatever period they want. But must not allow gullu butts to forcefully close the businesses, burn properties and must put bamboo in behind of people trying to do so. But it shouldn't take u-turn and bend in front of blackmailers, everyone must be brought in to books and if he/she is earning taxable income than be made to pay taxes.
As I always say, mid level and high level businessman pays nothing. And Imran Khan is squeezing consumer to death.
Businessman like Phajja ka paya, Student biryani, Imtiaz supermarket and Savor foods pay peanuts. Squeeze them, and that the way to. But tax collection should not be the only solution, but providing facilities should also be the goal.
Like Pakistani banking sector is incapable to a limit that they cant even bring Paypal in Pakistan. So, yes, operation and crackdowns are necessary, but facilitation are also necessary.
