Govt to expand tax net to reduce burden on taxpayers

Government unveils fixed tax scheme for small retailers

Finance Minister Muhammad Aurangzeb has said that the government is working to broaden the tax base in order to reduce the financial burden on existing taxpayers.

Addressing a joint press conference in Islamabad alongside Minister of State for Finance Bilal Azhar Kayani, he said Pakistan’s economy has remained stable despite last year’s floods and ongoing regional tensions in the Middle East. He added that the country managed these challenges through its own resources without seeking external financial assistance.

Aurangzeb stressed that expanding the tax net is essential to increase revenue and improve economic stability. He said the government is introducing a fixed tax scheme aimed at small traders and retailers to simplify compliance and encourage participation in the tax system.

Minister of State Bilal Azhar Kayani provided details of the scheme, stating that it would apply a fixed tax rate of one percent on eligible businesses. He explained that any withholding tax already deducted would be adjusted against the final liability.

He said the minimum annual tax under the scheme would be Rs25,000, while higher-turnover businesses would pay tax at one percent of their sales. The scheme is designed for traders with an annual turnover of up to Rs200 million.

Kayani said that shopkeepers opting for the scheme would not be required to use point-of-sale (POS) machines. Instead, a QR-coded plaque will be displayed at shops, allowing Federal Board of Revenue officials to verify taxpayer status through scanning.

He further said that a simplified one-page registration form has been introduced in Urdu and regional languages to facilitate traders. Businesses willing to join the scheme will submit the form along with the minimum tax payment.

He added that traders who do not wish to join the fixed tax scheme can continue under the general tax system. He also confirmed that previously deducted withholding tax will remain adjustable.

According to him, those registered under the scheme will be exempted from routine audits, while a special committee will address any audit-related concerns if they arise.

Kayani said that both filers and non-filers are eligible to join the scheme, provided certain conditions are met. Existing filers opting for the scheme must have a turnover of Rs200 million or less over the past three years.

He also warned that traders who neither file returns nor join the tax system will face penalties, starting from Rs10,000 in the first month, Rs25,000 in the second month, and Rs50,000 in the third month of non-compliance.