FBR receives only 130 returns under traders' tax scheme

The Federal Board of Revenue (FBR) has received only 130 income tax returns under its special tax scheme for small traders and shopkeepers, far below the 500,000 to 600,000 filings it had expected, a senior official said.

Speaking on The Express Tribune podcast, Sayyeda Maimuna, Second Secretary at the FBR headquarters' Transformation Delivery Unit, said the scheme had been introduced in consultation with traders to simplify tax compliance, expand the tax base and reduce the burden of complicated filing procedures.

Under the scheme, eligible traders can pay a minimum annual tax of Rs25,000 or 1% of their annual turnover, depending on the applicable calculation. They can file a simplified, one-page return through the Tax Asaan app or the FBR's online system. Maimuna said the initiative addressed traders' concerns about complicated tax returns, professional fees and the time required to visit government offices. Small shopkeepers without access to digital facilities can seek assistance at Regional Tax Offices' taxpayer facilitation centres.

"We have brought this scheme to fill the gap. We want our tax base to expand," she said, expressing disappointment over the low number of returns filed despite consultations with trade bodies. She said traders could either opt for the special scheme or file their regular income tax returns. Those choosing the normal filing route would remain subject to the applicable tax laws and requirements.

Maimuna clarified that individuals earning below the annual taxable income threshold of Rs600,000 were not required to pay income tax, although they could still have to fulfil applicable return-filing obligations. She said the scheme offered participating traders protection from routine FBR inspections, raids and shop sealing, with a green identification display outside their premises indicating their participation. However, she cautioned that the simplified system did not mean the FBR would ignore significant discrepancies between declared earnings and information obtained from third parties. Where substantial contradictions emerged, the board could bring the matter to the attention of relevant trade associations.

The official said small traders had also been exempted from certain technical requirements associated with point-of-sale (POS) systems and digital invoicing, while the scheme provided relief from withholding tax under Section 153, subject to applicable conditions.

Addressing concerns about sharing financial information with the tax authorities, Maimuna said the law required the FBR to protect taxpayers' data. She added that the board was investing in digital systems to improve its ability to identify economic activity and promote a cashless, paperless economy.

She urged traders facing difficulties in registering or filing returns to approach their Regional Tax Offices for assistance. Maimuna also outlined the penalties applicable to non-compliance, saying these could include fines for failing to file income tax returns or wealth statements, as well as measures such as blocking SIM cards, disconnecting electricity connections or sealing business premises where legally authorised.

She advised taxpayers to consult the FBR's official website for authentic notifications regarding filing deadlines, warning against relying on fake announcements circulating online. Traders who believe their rights under the scheme have been violated can approach the relevant Regional Tax Office, lodge a complaint with the Federal Tax Ombudsman or contact the FBR through its helpline and official email channels.

Maimuna said broadening the tax base would distribute the tax burden more fairly across traders, professionals, property owners and salaried individuals. However, she added, the benefits of wider compliance would emerge gradually rather than immediately.