Only 1,750 retailers join FBR's fixed tax scheme as returns deadline expires

The Federal Board of Revenue (FBR) is facing a weak response to its efforts to bring retailers into the tax net, with only 1,750 traders registering under its fixed tax scheme despite an estimated 3.6 million potential non-filers in the sector.

Of those who joined the scheme, just 220 were fresh filers, FBR officials said, adding that the board had aimed to bring between 200,000 and 500,000 retailers into the tax net through the initiative.

The poor response comes as the deadline for filing income tax returns expired on October 31, following two extensions by the FBR. The original deadline of September 30 was first extended to October 15 and then to October 31.

An FBR official said there would be no further extension. The board has received around 7.6 million income tax returns by the final deadline.

The tax authority is also facing a shortfall in its overall revenue collection. It collected Rs4,088.2 billion during the first four months of the current fiscal year, from July to October, against a target of Rs4,217.2 billion, leaving a gap of Rs129 billion.

The collection represents growth of around seven per cent, whereas the FBR needs to achieve 17 per cent growth to meet its annual target of Rs15,264 billion by June 30, 2027.

Revenue collection in October stood at Rs1,002 billion, up from Rs975 billion recorded by October 30. Similarly, the cumulative collection rose from Rs4,061.2 billion on October 30 to Rs4,088.2 billion by the end of the month.

With the retailers' scheme falling short of its Rs50 billion collection target, the FBR is now considering enforcement measures against traders who remain outside the tax net.

Under the law, the board can impose fines of Rs10,000 in the first month, Rs25,000 in the second month and Rs50,000 in the third month on non-compliant retailers. It can also seal the premises of businesses that fail to register.

The government had introduced the scheme to expand the tax base, but the limited number of registrations has complicated its efforts to bring retailers into the formal tax system.

The FBR is also planning to geo-tag markets in affluent areas of major cities to identify potential retailers who should be registered with the tax authority.