ISLAMABAD (MNN); In a fresh effort to broaden Pakistan’s tax base, the government on Friday introduced the ‘Fixed Tax Asaan Scheme’ for small traders and shopkeepers, replacing previous approaches that failed to bring a significant number of businesses into the tax net.
The new scheme, announced jointly by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kiani and Federal Board of Revenue (FBR) Member Hamid Attique Sarwar, is aimed at businesses with an annual turnover of up to Rs200 million.
Government officials said the scheme was developed after extensive consultations with traders’ organisations and business representatives who had sought a simpler and more business-friendly tax compliance framework.
Under the scheme, eligible traders will be required to pay a fixed tax of one per cent of their annual turnover through a simplified tax return form, which will be made available in local languages to facilitate compliance.
Finance Minister Aurangzeb explained that any withholding tax already paid by traders would be adjustable against their tax liability, provided they pay a minimum of Rs25,000 when submitting their return. Otherwise, the full one per cent tax rate would be applicable.
The minister clarified that participation in the scheme would remain voluntary. Traders could either join the new regime or continue filing taxes under the existing system.
Businesses opting for the scheme will receive a special identification plaque displaying their name, registration details, National Tax Number (NTN) and a QR code. Tax officials will be able to verify registration by scanning the code, and genuine participants will be protected from routine tax inspections.
Minister of State Bilal Azhar Kiani said traders joining the scheme would also be exempt from Point-of-Sale (POS) integration requirements and routine tax audits. Any disputes arising under the scheme would be resolved through consultation with the relevant traders’ associations.
The scheme will be open to both existing taxpayers and non-filers, provided their annual turnover has not exceeded Rs200 million during any of the last three years and their tax contribution under the scheme exceeds the amount paid in the previous year.
Kiani warned that businesses remaining outside both the normal tax regime and the new fixed tax scheme would face escalating penalties. The fine would start at Rs10,000 per month, increase to Rs25,000 in the second month and rise to Rs51,000 per month in the third month.
He expressed confidence that the initiative would succeed where previous schemes had fallen short, saying it had been designed after carefully studying past shortcomings.
Small vendors operating through kiosks and pushcarts will remain exempt from the scheme.
FBR official Hamid Attique Sarwar said Pakistan has around 4.4 million traders, of whom nearly 3.5 million are expected to fall within the scope of the new scheme. However, larger Tier-1 businesses, mainly operating in the branded retail sector, will not be eligible to participate. Their number is estimated at between 50,000 and 100,000.
Sarwar noted that many traders covered under the scheme currently pay little or no tax. Bringing them into the tax system, even through modest contributions, would help distribute the tax burden more fairly and reduce pressure on compliant taxpayers.
He stressed that the initiative should not be viewed as a tax amnesty programme but rather as a simplified taxation mechanism aimed at improving compliance.
Officials said the scheme would apply to businesses that have been operating for at least three years, maintain a physical business location and are engaged in commercial activities other than specialised professional services.
Eligible traders will be able to register through the FBR website, mobile applications or authorised tax practitioners. Participants will be required to maintain basic records of sales, purchases, expenses and other business transactions.
Those joining the scheme will also benefit from Active Taxpayer List (ATL) status, reduced withholding tax rates and enhanced financial credibility.
The announcement comes just days before the presentation of the federal budget for fiscal year 2026-27 on June 10, which is expected to be prepared under close monitoring by the International Monetary Fund (IMF).
