Finance Minister Aurangzeb says tax net expansion is inevitable for revenue generation

Islamabad  (Web Desk): The federal government has announced plans to widen Pakistan’s tax base as part of efforts to reduce the financial burden on existing taxpayers, Finance Minister Muhammad Aurangzeb said on Thursday.

Speaking at a joint press briefing in Islamabad alongside Minister of State for Finance Bilal Azhar Kayani, Aurangzeb stated that the country's economy had remained on a stable footing despite facing major challenges, including last year's devastating floods and ongoing unrest in the Middle East.

He emphasized that Pakistan managed these difficulties through its own resources and did not require external assistance.

The finance minister said increasing revenue collection is crucial for economic sustainability, adding that bringing more businesses into the tax system is unavoidable.

As part of this strategy, the government is introducing a fixed tax regime aimed at small traders and retailers.

Providing details of the initiative, Bilal Azhar Kayani said the scheme was formulated after consultations with representatives of the trading community.

The voluntary arrangement is intended for businesses with annual sales of up to Rs200 million.

Under the new system, participating shopkeepers will not be required to install point-of-sale (POS) machines. Instead, shops will display a QR-code plaque that can be scanned by Federal Board of Revenue (FBR) officials to verify the tax status of the business.

Kayani further explained that a simplified one-page registration form has been prepared for small traders and retailers.

The form will be made available in Urdu as well as regional languages to facilitate wider participation. Traders wishing to join the scheme will need to submit the form along with a minimum payment of Rs25,000.

He clarified that business owners who choose not to opt for the fixed tax system may continue under the regular tax framework. Any withholding tax already deducted will remain adjustable under existing rules.

According to the minister, traders enrolled in the fixed tax scheme will not be subjected to routine audits. In addition, a dedicated committee will be established to address audit-related concerns whenever they arise.

Kayani said participants in the scheme will pay tax at the rate of one percent of their declared turnover. Both registered taxpayers and non-filers will be eligible to apply.

However, existing filers must have recorded annual turnover of no more than Rs200 million during the past three years to qualify.

He also warned that traders who neither join the fixed tax scheme nor register as taxpayers under the general tax regime will face escalating penalties.

The fines will start at Rs10,000 in the first month, increase to Rs25,000 in the second month and rise to Rs50,000 in the third month.