Govt To Map Non-Compliant Shops Under Fixed Tax Scheme

The federal government has decided to immediately begin mapping markets and shops across the country as part of enforcement action against traders who have not joined the fixed tax scheme. The decision was announced after a review meeting on the scheme’s implementation, following a weak response from new traders before the statutory deadline.

The scheme requires a 1% tax payment and offers participating traders immunity from audit along with the ability to continue cash-based dealings. Officials say the government now wants field teams to identify shops and markets that remain outside the arrangement, with enforcement measures expected after the extended filing window ends.

According to the finance ministry’s statement, tax officers will work with trader representatives from Friday to map markets and individual shops nationwide. Minister of State for Finance Bilal Azhar Kayani chaired the review meeting and directed officials to visit markets according to a daily schedule while briefing shopkeepers about the scheme.

The government has been trying to bring more traders into the documented economy, but the initial response has been far below expectations. Officials said only 787 tax returns had been filed under the new scheme, and just four of them came from new filers. The authorities had estimated that the scheme could generate at least Rs50 billion during the current fiscal year.

Federal Board of Revenue officials have said the target is to bring between 500,000 and 1 million traders into the tax net out of an estimated 3.7 million traders who remain outside the system. The tax authority’s chairman has warned that if the scheme succeeds, revenue could exceed Rs100 billion, but if it fails, collections may remain negligible.

The meeting was also told that technical problems in the special tax return for traders had been resolved. Officials said an issue in the other income column, identified after complaints from traders, had been fixed so that shopkeepers could file returns during the extended period.

Kayani said shopkeepers had been offered a scheme shaped around their own demands and that there was no longer a justification for staying out of the tax system. He said penalties had been fixed after consultation with traders, with fines set at Rs10,000 in the first month after the deadline, Rs25,000 in the second month and Rs50,000 in the third month.

The wider challenge remains Pakistan’s narrow tax base. Officials said 5.7 million returns had been received this year compared with 8.5 million in the previous tax year, showing a decline of 32%. Out of 19 million registered taxpayers, only about 30% filed returns, keeping pressure on the government to expand compliance without triggering a major backlash from the trading community.