The Federal Board of Revenue (FBR) has decided to exempt petrol pump dealers and retail outlets from paying the Advance Income Tax. This decision came after petroleum dealers across Pakistan went on strike. The strike was a response to the government’s plan to impose this tax under Section 236H of the Income Tax Ordinance.
The Finance Act of 2024 had extended Section 236H, which allows suppliers to deduct Advance Income Tax from retailers. This means suppliers could take a portion of the tax directly from the money retailers make before the retailers even see it.
However, the FBR made an important clarification. They stated that the income of distributors and retailers working for oil marketing companies is already covered under the final tax regime.
This final tax regime means that these distributors and retailers have already paid all their required taxes and met their tax obligations fully. Therefore, the FBR decided that imposing an additional Advance Income Tax on them was unnecessary.
By exempting petrol pump dealers and retail outlets from this tax, the FBR hopes to address the concerns raised by the petroleum dealers and end the strike. The strike had caused significant disruptions, highlighting the importance of these dealers in the country’s supply chain.
This exemption shows the FBR’s willingness to listen to the concerns of businesses and make adjustments when necessary. It also underscores the balance the government must maintain between collecting taxes and supporting businesses to operate smoothly.
In summary, due to a nationwide strike by petroleum dealers, the FBR has exempted petrol pump dealers and retail outlets from paying the Advance Income Tax. The tax was initially imposed under Section 236H of the Income Tax Ordinance, as extended by the Finance Act 2024.
The FBR clarified that oil marketing companies’ distributors and retailers already meet their tax obligations under the final tax regime, making additional taxes unnecessary. This decision aims to resolve the strike and ensure the smooth operation of petrol supply across the country.
