The Federal Board of Revenue (FBR) has unveiled a draft Fixed Tax Scheme for Small Traders, introducing a simplified tax framework for businesses with an annual turnover of up to Rs200 million.
The proposal is designed to make tax filing easier, encourage more businesses to enter the formal economy, and increase government revenue without adding complex compliance requirements.
The FBR has invited traders, business associations, and other stakeholders to submit feedback within seven days before the scheme is finalized.
Who Can Join the FBR Fixed Tax Scheme?
The proposed scheme is available to:
- Shopkeepers
- Retail businesses
- Small traders
- Businesses with annual turnover up to Rs200 million
However, the following businesses will not qualify:
- Owners of multiple shops
- Tier-1 retailers
- Jewellers
- Professional service providers
This ensures the scheme remains focused on genuine small businesses that often struggle with complicated tax procedures.
How Much Tax Will Traders Pay?
Under the proposed framework, participating traders will pay:
| Tax Component | Details |
|---|---|
| Tax Rate | 1% of annual turnover |
| Minimum Tax | Rs25,000 (cash payment) |
| Filing Method | Simplified one-page return |
| POS Requirement | Not required |
The government estimates the scheme could generate over Rs50 billion annually if adopted on a large scale.
Voluntary Scheme Gives Traders a Choice
One of the biggest features of the proposal is that participation is voluntary.
Eligible businesses can either:
- Join the new fixed tax scheme, or
- Continue filing income tax returns under the existing tax system.
This flexibility allows traders to choose the option that best suits their business model.
One-Page Tax Return Simplifies Compliance
To reduce paperwork, the FBR has introduced a one-page income tax return.
Traders will only need to provide basic business information, including:
- Business name
- Address
- CNIC
- Nature of business
- Annual sales
- Purchases
- Expenses
- Profit
- Bank balance
- Cash in hand
- Other assets
The simplified format is intended to reduce errors and make tax filing easier for first-time taxpayers.
How to Register for the Scheme
Eligible traders will be able to register through multiple channels.
Online Registration
- FBR IRIS Portal
- FBR Mobile App
Offline Registration
- Nearest FBR Tax Office
Successful applicants will also receive green registration plates.
Another key benefit is that businesses joining the scheme will not be required to install Point of Sale (POS) machines, reducing compliance costs.
Why Is the FBR Introducing This Scheme?
Pakistan has long struggled with a narrow tax base, with many small businesses operating outside the formal economy.
Instead of relying solely on audits and enforcement, the FBR is attempting to encourage voluntary compliance through:
- Lower compliance costs
- Simple filing procedures
- Easy registration
- Predictable taxation
If implemented successfully, the scheme could increase documentation while reducing disputes between taxpayers and tax authorities.
Expert Insight
International experience shows that simplified tax systems often improve compliance among small businesses. Countries that reduce paperwork and offer predictable tax obligations generally see higher voluntary registration rates. The real success of Pakistan’s proposal will depend on whether traders view the system as fair, transparent, and easy to use.
