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ISLAMABAD ( WNAM REPORT) : The 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 annual turnover of up to Rs200 million.
The scheme was announced by 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 at a joint press conference.
Under the scheme, eligible retailers would be able to join a simplified fixed-tax regime by submitting a one-page declaration form and paying tax at the rate of one percent of their declared annual turnover.
Participating shopkeepers would be exempt from Point of Sale (POS) requirements, routine tax audits and withholding agent obligations, while withholding taxes already deducted through utility bills and other sources would be adjustable against their tax liability.
The scheme also envisages a special compliance identification plate carrying a QR code to facilitate verification and protect registered retailers from unnecessary inspections.
Speaking on the occasion, minister Aurangzeb said, the newly scheme for small shopkeepers would help broaden the tax base, ensure a fairer tax system and support the government’s transition from economic recovery to sustainable economic development.
He said, Pakistan had made significant progress in economic recovery, enabling it to withstand recent challenges, including flood-related expenditures and the impact of the ongoing Middle East conflict on oil import bills.
Aurangzeb stressed the need to make the tax system fair, balanced and sustainable, noting that the government had already undertaken a series of reforms in this regard. He said further details of technology-driven tax reforms, including the use of artificial intelligence, would be presented in Parliament next week.
Aurangzeb said the government’s objective was not merely to increase tax rates but to expand the tax net so that the burden on already documented sectors, particularly the corporate sector and salaried class, could be reduced and distributed more equitably.
He said the newly introduced scheme targeted the country’s small shopkeepers, a segment comprising an estimated 3 to 4 million retailers, who play an important role in the economy and society. He said, it would contribute significantly to broadening the tax base and bringing previously under-taxed segments into the formal tax system.
Elaborating on details of the tax facilitation scheme, Minister of State For Finance, Bilal Azhar Kiyani said, the scheme would apply to shopkeepers whose annual turnover or sales were less than or equal to Rs200 million.
Under the scheme, eligible retailers would be required to submit a simple one-page declaration form, available in Urdu, Pashto, Sindhi and Balochi languages, and pay a fixed tax equivalent to one percent of their declared turnover.
The minister said withholding taxes already deducted through electricity bills, telephone bills, mobile phone bills and other sources would be adjustable against the fixed tax liability.
However, every participant would be required to deposit a minimum of Rs25,000 at the time of filing the form, irrespective of the amount of withholding tax already deducted, adding the scheme was optional and shopkeepers would have the choice either to join the new fixed tax regime or remain under the normal taxation system.
Kayani said shopkeepers opting for the scheme would receive a special FBR-issued plate displaying the name of the shopkeeper, the shop’s NTN number and the relevant tax year. The plate would also indicate that the retailer was tax-compliant under the scheme and would contain a QR code for verification purposes.
He said FBR officials would be required to scan the QR code before taking any action regarding a participating shop and, if the plate was found valid, they would not be allowed to enter the premises for routine FBR-related inspections.
The minister said participants in the scheme would generally be exempt from tax audits. In exceptional cases where an audit became necessary, it would only be conducted after consultation with, or intimation to, a notified committee comprising representatives of traders’ organizations.
He said another major incentive under the scheme was exemption from FBR’s Point of Sale (POS) requirements, adding that participating retailers would also not be required to act as withholding agents.
Bilal Azhar Kayani said both non-filers and existing filers could avail themselves of the scheme. However, existing filers would be eligible only if their turnover had not exceeded Rs200 million in any of the last three years and if they paid at least the same amount of tax as paid in the previous year.
He said shopkeepers who neither joined the fixed tax scheme nor filed returns under the normal tax regime would face penalties of Rs10,000 in the first month, Rs25,000 in the second month and Rs50,000 in the third month.
The minister said the scheme, including its simplified filing form and compliance plate, had been finalized after consultations with traders’ bodies and reflected the government’s commitment to addressing the concerns of small retailers. He, however, clarified that Street vendors and pushcart operators are exempted from scheme.
On the occasion, senior FBR Member said the tax facilitation scheme had been designed specifically for small retailers and was expected to bring millions of small shopkeepers into the tax net while ensuring a more equitable distribution of the tax burden.
He said the scheme would benefit a vast segment of small traders operating across the country, particularly in smaller cities and towns, who had remained outside the formal tax system.
The FBR member said that while approximately 440,000 shopkeepers were currently documented, the potential pool of small retailers eligible for the scheme was significantly larger, estimated at around 3.5 million to 4 million businesses.
