Only 4 new traders filed under the 1% fixed tax scheme: Rs 10,000 to Rs 50,000 penalties next

Only 4 new traders filed a return under the government's 1% fixed tax scheme for retailers by the 30 September deadline, the Federal Board of Revenue (FBR) told the Senate Standing Committee on Finance. FBR Chairman Rashid Mahmood Langrial said "good faith has been defeated", and the government says field enforcement and staged penalties of Rs 10,000, Rs 25,000 and Rs 50,000 come next.

The numbers the FBR gave the Senate

• 10,338 retailers registered through the scheme's app in its first two months.
• 2,337 of them were new to the tax system.
• Only 787 returns were filed under the scheme by 30 September.
• Just 4 of those came from new traders.

For comparison, the FBR received about 5.77 million income tax returns in total by 30 September, against roughly 19 million registered taxpayers, and collected Rs 3.078 trillion in July to September, Rs 25 billion above its target, The Express Tribune reported.

What the scheme offers a shopkeeper

The scheme is for retailers with annual sales up to Rs 200 million. In return for a 1% fixed tax, a trader gets:

1. No audit of the return.
2. No requirement to install a Point of Sale (POS) system linked to the FBR.

As a rough guide, if the 1% is worked out on sales, a shop with Rs 1 crore in yearly sales would pay Rs 1 lakh, and one with Rs 5 crore would pay Rs 5 lakh. Minister of State for Finance Bilal Azhar Kayani called it "the best-ever scheme offered to any segment in the country". Officials told the committee it could raise more than Rs 100 billion a year if traders join, and almost nothing if they do not.

Why so few joined

Glitches in the registration app were the reason given for the low numbers. Langrial told senators those were excuses rather than real obstacles. Kayani accepted there had been technical problems but said enforcement would bring traders in.

What happens next

• Penalties in three steps: Rs 10,000 first, then Rs 25,000, then Rs 50,000, for traders who should be in the scheme and are not.
• More field visits: the government says enforcement teams will step up checks on shops.
• A little more time: the income tax return deadline has been extended to 15 October 2026, so retailers who registered but did not file still have two weeks.

What to do if you run a shop

1. Check whether you are on the Active Taxpayer List (ATL). Our guide shows how: ATL and NTN check.
2. Work out your tax both ways. Compare the 1% fixed tax with the normal regime using our income tax calculator.
3. File by 15 October. Late filing now carries higher penalties, and non-filers pay more withholding tax on banking, property and vehicles.
4. If you sell to businesses, check whether you also need to register for sales tax.