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ISLAMABAD: The federal government has announced a new fixed tax scheme for small shopkeepers, marking a significant step toward simplifying the country’s tax structure and improving compliance among small-scale traders.
The announcement was made by Minister of State for Finance Bilal Azhar Kayani during a joint press conference with Finance Minister Muhammad Aurangzeb. He said the initiative has been developed after extensive consultations with various traders’ associations and reflects long-standing demands from the business community for a simpler and more predictable tax system.
According to officials, the scheme is designed specifically for small retailers and shopkeepers with an annual turnover of Rs 20 crore or less. The government aims to reduce administrative hurdles and encourage voluntary tax participation by replacing complex filing procedures with a streamlined and uniform tax mechanism.
Under the new framework, a fixed tax rate of 1 percent will be applied to eligible businesses based on their declared turnover. This means that shopkeepers will be required to pay one percent of their annual sales as tax, making it easier to calculate liabilities and reducing the need for detailed accounting processes.
The government has also clarified that any withholding tax already paid by businesses during the year will be adjustable against their final tax liability. This provision is intended to prevent double taxation and ensure that taxpayers are not burdened beyond their actual dues.
In addition, the scheme introduces a minimum tax threshold of Rs 25,000, ensuring that all eligible businesses contribute a baseline amount to the national revenue system. For businesses with higher turnover within the defined category, tax obligations will increase proportionally while remaining within the fixed one percent structure.
Officials emphasized that the new system is not only aimed at revenue generation but also at formalizing a large segment of the informal retail economy. By simplifying procedures and reducing documentation requirements, the government expects greater participation from small traders who previously remained outside the tax net due to complexity and compliance costs.
One of the key features of the scheme is the introduction of a simplified single-page tax return form. Shopkeepers will only need to provide basic sales information, significantly reducing paperwork and time required for filing. Authorities believe this will help eliminate confusion and minimize errors commonly associated with traditional tax filing systems.
Finance officials further stated that digital integration and improved monitoring mechanisms will be gradually introduced to ensure transparency and reduce misuse. However, the immediate focus remains on ease of compliance and building trust between taxpayers and the tax administration.
The government has described the initiative as part of broader fiscal reforms aimed at widening the tax base while supporting small businesses. Officials believe that a predictable and simplified taxation framework will encourage voluntary compliance and improve revenue collection without placing excessive burden on traders.
Business community representatives have previously raised concerns about complicated tax procedures, frequent audits, and inconsistent assessments. The new scheme is expected to address some of these issues by offering clarity, stability, and reduced administrative interaction.
Authorities have indicated that further consultations will continue to refine the scheme based on feedback from stakeholders after implementation.
