ISLAMABAD: The government and retailers are heading towards evolving a consensus on a proposed simplified fixed tax scheme for retailers, which is expected to be incorporated into the upcoming Finance Bill 2026-27 for retailers having a turnover of up to Rs200 million.
The government may announce this fixed scheme for retailers after Eidul Azha and changes in the tax law may be incorporated into the Finance Bill 2026-27. The upcoming budget is set to be announced in parliament by June 5, 2026.
Top official sources confirmed to The News that the proposed scheme was discussed with small retailers/traders and their elected bodies, under which it is proposed that a fixed one per cent tax will be imposed on turnover of up to Rs200 million. There is a condition of a minimum tax payment of Rs25,000, and there will be no audit unless the FBR finds major discrepancies in income or assets. The FBR will issue and display its QR code certificate for those availing themselves of this scheme. There will be no restriction on those who prefer to remain outside the proposed fixed scheme. In the case of retailers who remain outside either the normal or fixed tax regime, the FBR will impose penalties under the proposed changes in the Finance Bill 2026-27.
Over the last three decades, successive governments introduced multiple fixed tax schemes for retailers under Sales Tax and Income Tax laws, none of which succeeded in documenting the retail sector.
Under the Sales Tax Act, Section 3A imposed 3% tax on turnover above Rs1 million, introduced before being omitted in the Finance Act 2008. Section 3AAA introduced a 1% enlistment tax in 2000, withdrawn in 2002.
In 2006, a special regime imposed 3% tax (2% sales tax + 1% income tax), repealed on June 30, 2007. A 2007 slab-based scheme (0%–0.75%), revised in 2014, was finally repealed in 2019.
On the Income Tax side, Section 113B (2005) introduced a 1% turnover tax, revised to 0.5%–0.75% in 2007 and abolished in 2013.
In 2016, Section 99A and Ninth Schedule introduced a trader scheme with 1% of working capital (2015), later revised to 0.1%-0.2% turnover tax (2016) with audit immunity for 2015-2018; Section 99A was substituted in 2022.
Section 99B (2019) enabled special trader schemes, under which the Tajir Dost Scheme (March 21, 2024) was launched but failed.
The question now arises as to how this upcoming fixed scheme will succeed. If anything can be done differently, it may achieve success. At least, traders from across Pakistan on Saturday endorsed the government’s proposed turnover tax scheme, describing it as a potential solution to corruption, harassment and blackmail allegedly faced by small businesses at the hands of tax authorities, while demanding that the turnover tax rate be reduced to 0.5 per cent and remain unchanged for at least three years.
Addressing a press conference at the National Press Club, Islamabad, alongside representatives of traders bodies from all the provinces and the federal capital, President of All Pakistan Anjuman-e-Tajiran and Traders Action Committee Islamabad, Ajmal Baloch, said the proposed turnover tax scheme was a positive initiative that could simplify taxation for small traders and help reduce direct interaction with tax officials.
