The government has introduced a new fixed tax scheme for small traders as part of broader efforts to expand the tax base and improve compliance before the upcoming federal budget. Officials said the initiative aims to simplify taxation while encouraging more traders to formally register their businesses. Moreover, the scheme focuses on reducing complexity in the tax system for small-scale businesses. Authorities expect it to bring a major shift in documentation and revenue collection.
Under the new plan, traders with annual sales of up to Rs200 million will pay a fixed one percent tax on declared turnover. In addition, eligible traders must have reported similar sales levels during the previous three years to qualify for the scheme. Officials clarified that participants can choose between the voluntary fixed scheme or the regular tax system. This flexibility is designed to encourage wider participation among small businesses.
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The government has set an ambitious target to increase the number of registered small traders from 600,000 to 3.5 million under this initiative. Furthermore, officials aim to bring millions of informal traders into the documented tax network to improve transparency. A trader with Rs200 million annual turnover would pay around Rs25,000 under the fixed system. This calculation highlights the simplified structure of the proposed tax model.
At the same time, strict penalties have been introduced for traders who fail to register under the new system. Authorities stated that non-filers will face a fine of Rs10,000 in the first month, which will increase to Rs25,000 in the second month. If non-compliance continues, the monthly penalty may rise to Rs50,000. Officials said these measures are intended to encourage timely registration and discourage tax evasion.
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In addition, the scheme introduces simplified administrative processes, including a one-page registration form for ease of access. Registered traders will display their name and National Tax Number on a board with a QR code for public verification. Moreover, officials confirmed that Federal Board of Revenue officers will not be allowed to enter registered traders’ premises under this scheme. This step aims to reduce harassment and improve trust in the system.
Furthermore, the government has exempted registered small traders from audits and point of sale system requirements to support ease of doing business. However, in exceptional cases, audits may be conducted in consultation with trader representative committees to ensure fairness. Officials believe the scheme will strengthen the formal economy while protecting small businesses. Overall, the initiative represents a significant step toward tax reform and financial inclusion.