The Federal Board of Revenue (FBR) plans to impose penalties of up to Rs. 150,000 on non-compliant traders who fail to file income tax returns after the extended deadline, as only 100 new retailers have filed returns under the government’s fixed tax scheme.
The FBR intends to use existing provisions of the Income Tax Ordinance to issue notices to traders who did not join the scheme. Tax officials said the agency could send notices to 10,000 to 15,000 traders under Section 114(4), requiring them to file returns within the specified period.
Under the law, failure to file an income tax return can attract a minimum penalty of Rs. 50,000 in most cases, while failure to submit a wealth statement can result in an additional penalty of Rs. 100,000. This could bring the combined penalty to Rs. 150,000.
The FBR is also planning to map 30,000 traders for the first round of notices, although government sources described the target as ambitious. Officials have reportedly raised concerns that the new scheme lacks effective penalties to compel traders to enter the tax system.
The fixed tax scheme offered traders a tax rate of 1 percent of income or a minimum payment of Rs. 25,000, along with exemptions from audits and permission to continue cash transactions without installing digital machines.
By Wednesday, 2,593 new retailers had registered under the scheme, but only 100 had filed returns and paid a combined Rs. 3.2 million for tax year 2026. Their average payment was Rs. 32,000.
According to the FBR, Pakistan has around 4.3 million traders, of whom 600,000 are already part of the tax system. The scheme was intended to bring the remaining 3.7 million traders into the tax net. The government is considering whether to impose penalties gradually or proceed under existing tax laws.
Meanwhile, traders have announced a partial strike against the registration of police cases over the use of plastic bags. Traders’ leader Ajmal Baloch said he continued to support the fixed tax scheme but accused the Islamabad Capital Territory administration of creating obstacles.
He also alleged that technical problems with the online tax filing application had hindered compliance, including difficulties adjusting withholding tax paid through electricity bills. He said the issue was corrected on Wednesday.
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