ISLAMABAD: Only four new shopkeepers joined the fixed tax scheme by the legal deadline, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial said on Wednesday. He admitted that the response was lower than expected and said traders had not acted in good faith.
The government also extended the deadline for filing tax returns by 15 days after receiving 5.7 million returns by September 30, compared with 19 million registered taxpayers. However, the chairman said 1.7 million more people had filed returns than by the same date last year.
The weak response to the traders’ scheme came as the first quarter of the current financial year ended. The FBR collected Rs3.03 trillion, meeting its quarterly target and improving its position in talks with the International Monetary Fund (IMF). However, only 5.7 million returns had been filed by the deadline, compared with 19 million registered taxpayers.
The Senate Standing Committee on Finance, led by PPP Senator Saleem Mandviwalla, received a detailed briefing on the new fixed tax scheme from Minister of State for Finance Bilal Azhar Kayani and the FBR chairman.
“We are worried that the response to the tax scheme is lower than expected,” Langrial said. FBR Member Operations Zubair Bilal said 787 tax returns had been filed under the scheme, but only four were from new filers. Kayani, who helped design the scheme, said he hoped more traders would join once the FBR began contacting them. He said technical problems with the app had made it difficult for first-time filers.
“If traders do not join the scheme, and even fines fail to convince them, then strong action will be needed,” Kayani said. He hoped the FBR would now visit markets to explain the scheme.
When the committee decided to review the scheme’s progress after a month, Langrial said the situation might not change. “Traders have broken our trust,” he said, adding that problems with the application were only an excuse for not filing returns.
The government introduced a 1% fixed tax scheme for retailers. In return, they would be fully exempt from audits and from having to install Point of Sale systems.
Kayani called it the best scheme ever offered to any group in the country. “The issue with traders began before I was born, and the new scheme is still at an early stage,” he said. He hoped more traders would join once the government began issuing fines.
PML-N Senator Anusha Rahman asked whether the FBR had prepared a list of traders who were not following the rules. FBR Member Strategic Transformation Dr Hamid Ateeq Sarwar said that everyone who did not file a return would be contacted.
Sarwar said the government aimed to bring 500,000 to one million traders into the tax system, out of the 3.7 million who were not registered. Asked about collecting Rs50 billion from traders this year, the FBR chairman said the amount could exceed Rs100 billion if the scheme worked. If it failed, payments would be very low.
Kayani said the government had spoken with traders before introducing the scheme. He added that 10,338 retailers had registered through the app in two months. The scheme covers traders with yearly sales of up to Rs200 million. Of those who registered, 2,337 were new, but only a few had filed returns.
The committee was told that fines would be introduced in stages: Rs10,000 at the first stage, Rs25,000 at the second and Rs50,000 at the third. The FBR chairman said awareness campaigns were under way. He also noted that some traders still believed they would not be fined if they did not register through the app.
Meanwhile, the government extended the deadline for filing income tax returns for tax year 2026 by 15 days, to October 15. It did so after requests from trade groups and tax bar associations. Taxpayers had faced problems filing returns because of faults in the system developed by Pakistan Revenue Automation Limited (PRAL).
The FBR received 5.7 million tax returns, compared with 8.5 million filed last year—a 32% decrease. But Zubair Bilal said the number of filers was 1.7 million higher than by September 30, 2025.
The FBR collected Rs3.078 trillion in taxes during the July–September quarter, exceeding its target by Rs25 billion. However, the target was low, and collections rose by only 6.5% compared with the same period last year.
The government and the IMF have set an annual tax target of Rs15.263 trillion for the FBR this financial year. This requires a 17.4% increase over last year’s collection. The IMF has made meeting the targets a requirement. Its approval of the sixth loan payment will depend on the FBR meeting its target for the first half of the year.
According to early figures, the FBR collected more than Rs1.432 trillion in income tax, Rs52 billion below its three-month target. Sales tax collections were above target for the third month in a row. The FBR collected Rs1.14 trillion in sales tax, Rs85 billion above target.
Federal excise duty collections were Rs197 billion, close to the target. Customs duty collections reached Rs312 billion, Rs8 billion below target.
Reported By: Commerce Reporter I Islamabad
