Only four newly-registered merchants submitted tax returns under the fixed-rate scheme by the legal deadline, leading the Federal Board of Revenue (FBR) to admit that the uptake was far below what was anticipated and to caution that tougher action could be taken against retailers who do not comply. FBR Chairman Rashid Mahmood Langrial told the Senate Standing Committee on Finance that the level of participation remained unsatisfactory, noting that the government’s effort to attract traders through a simplified tax option had not delivered the expected enrolment.
“Good faith has been defeated” by traders, Langrial asserted, dismissing claims of technical problems with the filing portal as mere pretexts for non-submission. According to FBR Member Operations Zubair Bilal, a total of 787 returns have been lodged under the new arrangement, with only four originating from first-time filers. The authorities introduced a 1% fixed-tax programme for shopkeepers, granting audit immunity and the provision of Point-of-Sale devices in exchange for the stipulated tax payment.
Minister of State for Finance Bilal Azhar Kayani explained that the scheme was developed after consulting the trading community and expressed optimism that enrolment would rise once the FBR began pursuing businesses that remain outside the system. He reported that 10,338 retailers had signed up through the online portal within a two-month period, including 2,337 newcomers, although only a limited number have subsequently filed returns. The initiative targets merchants whose yearly sales do not exceed Rs200 million.
The administration aims to bring between 500,000 and one million traders into the tax net out of an estimated 3.7 million currently untaxed. Kayani warned that if merchants continue to reject the scheme and modest fines fail to persuade them, the government will have to resort to more forceful enforcement. Penalties are slated to be rolled out in phases, starting with a Rs10,000 charge, escalating to Rs25,000 at the second level and reaching Rs50,000 at the final stage.
FBR Member Strategic Transformation Dr Hamid Ateeq Sarwar indicated that individuals who do not lodge returns will be chased by the tax authority. The tepid response to the traders’ programme coincided with the government’s decision to extend the general filing deadline by 15 days. By the statutory cut-off of 30 September, the FBR had received 5.7 million returns, compared with a registered taxpayer base of 19 million.
Langrial noted that the total number of filers was still 1.7 million higher than at the same juncture in the previous year, and the board succeeded in meeting its first-quarter revenue target of Rs3.03 trillion. The Senate committee, chaired by Senator Saleem Mandviwalla, resolved to revisit the traders’ scheme after a month, though Langrial cautioned that the situation might remain unchanged at that time.
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