Pakistan’s Federal Board of Revenue (FBR) is facing a slow response to its latest attempt to bring small retailers into the formal tax system. The Aasaan Tax Scheme has so far attracted only a limited number of completed tax returns, while the number of genuinely new taxpayers remains particularly low.
According to the latest figures, 317 retailers have submitted returns under the scheme. However, only two of them were previously outside the income tax system. The remaining 315 were already registered taxpayers, suggesting that the initiative has so far had limited success in expanding the tax base.
Revenue Far Below Government Target
The scheme has collected approximately Rs26 million in tax revenue so far. This is considerably below the government’s annual target of Rs50 billion.
With roughly a week left before the filing deadline, authorities are trying to encourage more retailers to complete the process. The current average payment works out to approximately Rs81,944 per participating retailer.
The two newly registered taxpayers who have completed their returns reportedly belong to Quetta and Rawalpindi. In addition, 44 other new retailers had prepared their returns but had not formally submitted them at the time of the latest review.
While around 5,000 retailers have registered for the simplified facility, only a small proportion have actually completed their tax filings.
Government Intensifies Outreach
The government is now increasing efforts to promote the scheme among traders. Minister of State for Finance and Railways Bilal Azhar Kayani recently reviewed the progress of the initiative and called for greater efforts ahead of the deadline.
FBR officials across the country have been instructed to conduct awareness campaigns and cooperate with trader associations and local tax bars. The objective is to explain the registration and filing process and address concerns that may be preventing shopkeepers from participating.
Tax commissioners have also been directed to maintain contact with local tax representatives so that traders can obtain assistance from tax professionals of their choice.
What Does the Scheme Offer Retailers?
The Aasaan Tax Scheme provides a simplified method of meeting tax obligations. Under the arrangement, participating retailers pay a fixed tax equal to 1% of their sales.
The scheme also provides certain concessions. Retailers using the facility are reportedly exempt from tax audits and some requirements concerning digital transaction systems.
Businesses that do not wish to use the simplified system can instead continue filing their regular income tax returns under the existing tax framework.
However, traders who fail to comply with either system may face penalties. The reported fines are Rs10,000 for the first month of non-compliance, Rs25,000 for the second month and Rs50,000 for the third month.
FBR Relies on Trader Associations
A significant part of the government’s strategy is the involvement of trader representatives. The FBR has collected information about representatives from different parts of the country and plans to involve them in visits to markets alongside tax officials.
The aim is to create direct communication between government officials and shopkeepers, allowing retailers to receive information about the scheme and assistance with completing the required procedures.
The government considers this approach important because trader representatives were involved in the design and implementation of the latest scheme.
Another Attempt to Expand the Tax Base
The Aasaan Tax Scheme follows the earlier Tajir Dost initiative, which was also introduced to increase tax compliance among retailers. That programmed failed to generate the level of participation and revenue that authorities had hoped for.
The latest initiative is intended to provide a simpler alternative for small businesses, particularly those that may find the conventional tax system complicated.
However, the low number of new taxpayers so far remains a key challenge. Turning registrations into completed returns will be crucial if the government wants the scheme to make a meaningful contribution to broadening the tax base.
Overall Tax Filing Numbers Rise
The limited response from new retailers comes at a time when overall income tax filing has reportedly increased.
The FBR has received approximately 3.5 million income tax returns so far this year, compared with around 2.5 million during the corresponding period of the previous financial year. Tax payments have also reportedly reached about Rs10 billion.
With the deadline approaching, the government has only a short period to persuade registered retailers to complete their filings. The final participation figures will provide a clearer indication of whether the Aasaan Tax Scheme can succeed in attracting previously undocumented retailers into Pakistan’s formal tax network.