FBR warns traders of penalties: Only four returns filed under easy tax scheme

ISLAMABAD: Only four new retailers have filed tax returns under the government’s one percent fixed tax scheme, prompting the Federal Board of Revenue (FBR) to admit that participation remains well below expectations and warn non-compliant traders of enforcement action.

Chairman FBR Rashid Langrial told the Senate Standing Committee on Finance and Revenue on Wednesday that although the government had introduced an easy tax scheme after consultations with traders, registration and return filing by retailers remained significantly lower than expected.

He said traders had earlier objected that tax schemes were complicated and the tax burden was too high, but both concerns had been addressed under the new scheme.

READ MORE: Late tax returns: Govt warns shopkeepers of fines

“The retailers were not coming into the tax scheme for two reasons,” Langrial said, adding that traders still believed that failure to file a return would not result in any action.

He warned that traders who failed to register and comply with the scheme would face enforcement measures, saying the perception that no action would be taken against non-filers had to be eliminated.

The committee was informed that an application for registration under the scheme had been operationalised last month and 10338 retailers including 2337 new retailers registered i.e. majority existing, covering businesses with annual sales of up to Rs20 million.

However, only four new retailers had filed their tax returns, highlighting a major gap between registration and actual compliance.

State Minister for Finance and Revenue Bilal Azhar Kiani said the retail scheme had been introduced after consultation with the business community. He said technical issues in the registration application had been identified and resolved.

The committee was informed that registration under the scheme was mandatory and retailers were required to declare their income and file tax returns.

The committee was informed that penalties would initially be imposed in stages, with fines of Rs10,000 at the first stage, Rs25,000 at the second and Rs50,000 at the third stage. Enforcement would subsequently be intensified against businesses continuing to refuse compliance.

Langrial said the FBR would observe retailers’ compliance for one month to assess whether they were filing returns under the scheme. He said the scheme had been made sufficiently simple for ordinary traders and claimed that retailers had not previously been offered such extensive facilitation.

The committee, however, stressed the need for a sustained awareness campaign. Chairman Senate Standing Committee on Finance and Revenue Senator Saleem Mandviwalla directed that the scheme be widely publicised for at least one month.

The committee recommended publication of advertisements and distribution of flyers containing complete information about the scheme in markets to facilitate traders and improve compliance.

The FBR chairman said extensive awareness campaigns had already been conducted, but acknowledged that a perception persisted among some traders that non-registration would not lead to penalties.

The committee was informed that FBR had received 5.5 million tax returns so far, compared with 4 million during the corresponding period last year. The committee was further informed that around 4.3 million commercial WAPDA electricity meters existed across the country, whereas only around 600,000 commercial meter holders had filed tax returns. FBR would target 0.5 million to one million retailers including 0.2 million voluntarily and the remaining through enforcement.

The committee also reviewed withholding of legitimate income tax refunds of Gumcrop (Pvt) Ltd and Oleocrop (Pvt) Ltd. Langrial assured members that the outstanding refunds would be released within 15 days.

The committee was further briefed on alleged irregularities involving consumption certificates for raw materials worth Rs1.12 trillion supplied to factories operating in tax-exempt areas of FATA and PATA. Officials said five individuals had been arrested and investigations were underway. The committee decided to take up taxation issues relating to FATA and PATA as a single agenda item in future meetings.

The Committee was briefed by the Accountant General of Pakistan Revenues (AGPR) regarding the implementation of a Supreme Court judgment and matters relating to the Director Staff of the Senate Secretariat. Senator Farooq H. Naek observed that the court order was not applicable to the Senate Secretariat.

Mandviwalla stated that the Senate has its own constitutional structure, rules and regulations and does not fall under the administrative control of the Establishment Division.

The Committee discussed the need for the Senate to independently handle its financial and administrative matters instead of relying on AGPR. The Committee directed that the pending pay-related matters of the Director Staff of the Senate Secretariat be resolved within 14 days.

While discussing the grant of honorarium equivalent to five months’ basic pay for the year 2025-26 to medical staff working at Parliament House, the Committee was informed that the Ministry of National Health Services, Regulations and Coordination had written to the Pakistan Institute of Medical Sciences (PIMS)/Polyclinic regarding payment of the honorarium 2025-26 to the medical staff posted at the Senate Secretariat.

Copyright Business Recorder, 2026