The federal government has unveiled a new fixed tax scheme for small traders and retailers as part of its broader strategy to expand the tax net and increase revenue collection. Finance Minister Muhammad Aurangzeb announced the initiative during a joint press conference with Minister of State for Finance Bilal Azhar Kayani in Islamabad.
Aurangzeb emphasized that expanding the tax base is essential to reducing the burden on existing taxpayers. He noted that Pakistan’s economy has remained stable despite significant challenges, including devastating floods and ongoing tensions in the Middle East. According to the finance minister, the country managed these challenges through its own resources without relying on foreign assistance.
Simplified Tax System for Small Businesses
The newly introduced fixed tax scheme is designed specifically for small traders and retailers with an annual turnover of up to Rs200 million. The government estimates that around three to four million traders fall within this category.
Aurangzeb said the scheme was developed after extensive consultations with trader associations and stakeholders. He welcomed the participation of businesses that had previously remained outside the formal tax system and were now willing to contribute voluntarily.
Key Features of the Fixed Tax Scheme
Bilal Azhar Kayani outlined several key features of the initiative. Traders joining the scheme will pay a fixed tax rate of one percent on their declared turnover. Any withholding tax already deducted will be adjustable against their tax liability.
The minimum tax payment under the scheme has been set at Rs25,000. To facilitate compliance, the government has introduced a simple one-page tax form that will be available in Urdu and regional languages.
Exemptions and Compliance Measures
Businesses enrolled in the scheme will be exempt from using Federal Board of Revenue (FBR) Point of Sale (POS) machines. Instead, participating shops will display an FBR-issued plaque featuring a QR code that officials can scan to verify taxpayer status.
Kayani also announced that traders under the scheme would be exempt from routine audits, while a dedicated committee would address any audit-related concerns.
Penalties for Non-Compliance
The government has introduced penalties for traders who fail to join either the fixed tax scheme or the general tax regime. Fines will start at Rs10,000 in the first month, increase to Rs25,000 in the second month, and reach Rs50,000 in the third month.
Officials believe the initiative will help document the economy, increase tax revenues, and create a more inclusive and transparent taxation system for Pakistan’s growing retail sector.
