Govt unveils fixed tax regime for small traders, shopkeepers ahead of budget

• Finance Minister says scheme applies to businesses with annual turnover up to Rs200m

• Says ‘flat 1pc tax rate’ introduced with simplified compliance mechanism for small traders

• Kiani says traders offered optional regime with POS and audit exemptions

• FBR member says 3.5 million traders expected to fall under new scheme

 ISLAMABAD: The government on Friday unveiled a new taxation initiative titled the “Fixed Tax Asaan Scheme” for small traders and shopkeepers with an annual turnover of up to Rs200 million, claiming the simplified regime has been finalised “in consultation with trader bodies” in response to “their longstanding demand for an easier tax compliance mechanism.”

The announcement was made in a video message by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kiani, and Federal Board of Revenue (FBR) Member Hamid Attique Sarwar.

The new scheme comes in the wake of the apparent failure of the Tajir Dost Scheme introduced last year, which struggled to broaden the tax base.

Finance Minister Aurangzeb said under the scheme, tax payable would be adjustable against withholding tax already paid, provided a minimum of Rs25,000 is deposited at the time of filing the tax return. Otherwise, the standard tax rate of 1 per cent would apply.

He said the scheme would be optional, allowing traders to either join it or continue under the normal tax regime. Those opting for the fixed tax system would be issued a special plaque for display at their business premises, carrying details including name, registration number and National Tax Number (NTN), along with a QR code.

“A tax inspector would be able to scan the QR code on the plaque and, if it is found to be genuine, would not be permitted to enter the premises for tax-related inspections,” the minister added.

Scheme to be accessible in local languages; POS and audit exemptions

Minister of State for Finance Bilal Azhar Kiani, who led negotiations with trader bodies, said the scheme would apply to businesses with annual turnover of up to Rs200 million. A flat tax rate of 1 per cent would be payable through a simplified form available in all local languages.

ملک بھر کے چھوٹے دکانداروں کے لئے فکسڈ ٹیکس سکیم کا اعلان کر دیا گیا ہے جس کا مقصد پاکستان میں ٹیکس نیٹ بڑھاناہے۔ حکومت یہ سکیم تاجر اور دکاندار تنظیموں کے نمائندوں کی مشاورت اور ان کے مطالبے پر لائی ہے۔ 20 کروڑ یا اس سے کم سالانہ فروخت والے دکاندار اس سکیم کا حصہ بن سکتے ہیں جس… pic.twitter.com/KSLtfSAciW

— Bilal Azhar Kayani (@BilalAKayani) June 5, 2026

He said those opting for the scheme would be exempt from Point-of-Sale (POS) requirements and tax audits. In case of disputes, matters would be resolved in consultation with the relevant traders’ association.

Both non-filers and existing filers would be eligible, provided their turnover had not exceeded Rs200 million in any of the preceding three years, and the minimum tax payable was higher than that paid in the previous year.

He added that traders outside both the fixed tax scheme and the normal tax regime would face penalties of Rs10,000 per month for the first month, rising to Rs25,000 in the second month and Rs51,000 in the third month.

Kiani said the scheme was designed after lessons learned from previous initiatives and “would be successful this time.”

He added that kiosks and pushcart-based small traders would be excluded from the scheme.

Scheme to cover 3.5 million traders

FBR Member Hamid Attique Sarwar said there are around 4.4 million traders in the country, of whom approximately 3.5 million would fall under the new scheme. Larger traders, classified as Tier-1 and mostly operating in the branded sector, estimated at between 50,000 and 100,000 businesses, would not be eligible.

He said most traders under the scheme currently pay little or no tax, and even small contributions would significantly broaden the tax base without overburdening compliant taxpayers. He clarified that the initiative should not be termed an amnesty scheme.

Officials said eligibility would require at least three years of business operations, a physical business premise, and engagement in non-specialised commercial activity. Small taxpayers already filing returns before 2025 could also join if they meet the criteria.

Traders will be able to register through the FBR website, mobile applications, or tax practitioners, and will be required to maintain simplified records of sales, purchases, expenses and other transactions.

Participants will also gain benefits such as Active Taxpayer List (ATL) status, reduced withholding tax rates, and improved financial credibility.

The development comes ahead of the federal budget for FY2026-27, scheduled for June 10, which is expected to be prepared under the close supervision of the International Monetary Fund (IMF).