Simplified tax scheme aims to expand tax base, formalise retail sector and increase revenue collection
ISLAMABAD, June 19, 2026: The federal government has set a target of bringing approximately 3.5 million shopkeepers into the tax net during the fiscal year 2026-27, Minister of State for Finance and Revenue Bilal Azhar Kayani said on Friday.
Speaking during the National Assembly debate on the federal budget 2026-27, Kayani said the government’s economic strategy is focused on strengthening the national economy, broadening the tax base and ensuring inclusive growth.
He said the budget contains a range of relief measures for taxpayers, exporters, farmers and the housing sector while maintaining fiscal discipline.
New Scheme for Small Traders
Highlighting efforts to expand the tax net, Kayani announced the introduction of a simplified tax scheme aimed at encouraging small traders to become part of the formal economy.
Under the proposed scheme, shopkeepers with annual sales of up to Rs20 million will be required to pay a 1 per cent tax.
To facilitate registration, the government plans to introduce a simplified Urdu-language registration form. Registered traders will also receive a special green plate issued by the Federal Board of Revenue (FBR) and will benefit from limited audit scrutiny under normal circumstances.
“The goal is to bring 3.5 million shopkeepers into the tax net,” the minister told lawmakers.
Government Highlights Economic Stabilisation
Kayani said the economy was facing serious challenges when the current government assumed office in February 2024, with concerns over economic stability and fiscal sustainability.
However, he said the government successfully restored economic stability through prudent policies under the leadership of Prime Minister Shehbaz Sharif.
According to the minister, inflation declined significantly, foreign exchange reserves improved and Pakistan successfully completed its commitments under the International Monetary Fund programme.
He further stated that the government achieved its fiscal targets during fiscal year 2025-26 without introducing any supplementary or mini-budget.
Tax Relief for Salaried Individuals
The minister highlighted several tax relief measures announced in the federal budget for salaried taxpayers.
He said the tax rate for individuals earning between Rs2.2 million and Rs2.3 million annually had been reduced from 23 per cent to 20 per cent.
Similarly:
• Income between Rs3.2 million and Rs4.1 million: tax reduced from 30% to 25%;
• Income between Rs4.1 million and Rs5.6 million: tax reduced from 35% to 29%;
• Income between Rs5.6 million and Rs7 million: tax reduced from 35% to 32%.
He also noted that the government had abolished super tax for the relevant category of taxpayers as part of broader relief measures.
Incentives for Exporters, IT and Housing
Kayani said exporters had been granted tax relief to lower business costs and improve competitiveness in international markets.
The government has also extended tax incentives for the information technology sector for an additional three years to support investment and export growth.
In the housing sector, he said measures had been introduced to improve access to home ownership through the Apna Ghar Scheme, under which subsidised financing will be provided for house construction.
Support for Agriculture Sector
The minister said the government had allocated Rs300 billion for agriculture-related initiatives and an additional Rs110 billion under the Prime Minister’s Agriculture Youth Initiative.
To support farmers, customs duty on agricultural machinery has been abolished, while various measures have been introduced to enhance productivity and reduce production costs.
Focus on Broadening the Tax Base
The government’s latest initiative to register millions of shopkeepers reflects a broader effort to document the economy and increase tax compliance among traditionally under-taxed sectors.
Economic experts believe the success of the scheme will depend on the simplicity of registration procedures, effective enforcement and the government’s ability to build trust among small traders.
The proposed measures form part of the federal government’s wider strategy to enhance revenue collection while promoting economic growth and investment during fiscal year 2026-27.
