The federal government on Friday launched a new Tax Facilitation Scheme for small shopkeepers, aimed at simplifying tax compliance, broadening the tax base, and encouraging voluntary registration of retailers with an annual turnover of up to Rs200 million.
Key Features of the Scheme
Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, Minister of State for Finance and Railways Bilal Azhar Kayani, and Member Federal Board of Revenue (FBR) Hamid Atiq Sarwar announced the scheme at a joint press conference in Islamabad. Under the scheme, eligible retailers can join a simplified fixed-tax regime by submitting a one-page declaration form and paying tax at one percent of their declared annual turnover.
Participating shopkeepers will be exempt from Point of Sale (POS) requirements, routine tax audits, and withholding agent obligations. Withholding taxes already deducted through utility bills and other sources will be adjustable against their tax liability.
Compliance and Verification
The scheme also includes a special compliance identification plate with a QR code for verification, protecting registered retailers from unnecessary inspections. Minister Aurangzeb stated that the scheme would help broaden the tax base, ensure a fairer tax system, and support the transition from economic recovery to sustainable development.
Aurangzeb highlighted Pakistan's progress in economic recovery, enabling it to withstand challenges like flood-related expenditures and the impact of the Middle East conflict on oil import bills. He emphasized the need for a fair, balanced, and sustainable tax system, noting ongoing reforms and upcoming technology-driven reforms involving artificial intelligence.
Targeting Small Retailers
The scheme targets an estimated 3 to 4 million small shopkeepers, a crucial segment of the economy. Minister of State Bilal Azhar Kayani clarified that the scheme applies to shopkeepers with annual turnover up to Rs200 million. Eligible retailers must submit a one-page declaration form available in Urdu, Pashto, Sindhi, and Balochi, and pay a fixed tax of one percent of declared turnover.
Withholding taxes from electricity, telephone, and mobile phone bills are adjustable, but a minimum deposit of Rs25,000 is required at filing. The scheme is optional; shopkeepers can choose between the fixed tax regime and the normal taxation system.
Incentives and Penalties
Participants receive an FBR-issued plate with the shopkeeper's name, NTN number, and tax year, indicating tax compliance. FBR officials must scan the QR code before inspections; valid plates prevent entry for routine checks. Participants are generally exempt from audits, except in exceptional cases with committee consultation.
Other incentives include exemption from POS requirements and withholding agent duties. Both non-filers and existing filers can join, but existing filers must have turnover under Rs200 million in the last three years and pay at least the same tax as the previous year. Shopkeepers who neither join nor file returns face penalties: Rs10,000 in the first month, Rs25,000 in the second, and Rs50,000 in the third.
Kayani noted that the scheme was finalized after consultations with traders' bodies. Street vendors and pushcart operators are exempt. FBR Member Hamid Atiq Sarwar said the scheme is designed for small retailers, expecting to bring millions into the tax net. Currently, about 440,000 shopkeepers are documented, but the potential pool is 3.5 to 4 million businesses.
