Govt plans Rs150,000 fines for non-compliant retailers as fixed tax scheme fails to attract filers

Profit reported that the Federal Board of Revenue is preparing notices with fines totalling at least Rs150,000 for retailers who have not met their tax obligations. The move follows a weak uptake of the fixed tax scheme, where a mere 100 newly registered traders filed returns although 2,593 retailers signed up. It is the third retailer tax initiative Prime Minister Shehbaz Sharif has launched in four years.

Under the plan, the tax authority would map 30,000 traders and begin with 10,000 to 15,000 notices under Section 114(4) of the Income Tax Ordinance, which lets tax commissioners demand returns within 30 days. Non-filers could face a minimum penalty of Rs50,000 under Section 182(1), or Rs10,000 for salaried individuals, where at least 75% of income is from wages. Wealth statement lapses may also trigger a separate charge under Section 182(1AA), set at 0.1% of taxable income weekly but at least Rs100,000.

The fixed tax scheme offered a 1% tax subject to a Rs25,000 minimum, plus audit exemption and cash dealings without digital machines. Only 100 filers paid Rs3.2 million in full and final tax for tax year 2026, averaging Rs32,000 each, while roughly 99% of the more than 1,000 returns came from traders already registered. With 4.3 million traders and only 600,000 registered, officials reportedly disagree on enforcement, with one proposal raising penalties from Rs10,000 to Rs25,000 and then Rs50,000.