Response to fixed tax unsatisfactory

Four new traders file returns; FBR collects Rs3.08tr in Q1, extends deadline FBR received Rs719 billion worth of sales tax, exceeding the target by Rs85 billion. PHOTO:FILE As only four new shopkeepers opted for the fixed tax scheme until the statutory deadline, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial admitted on Wednesday that the response remained below expectations and traders defeated the good faith. The government also gave a 15-day extension in filing all tax returns after receiving 5.7 million returns by the deadline of September 30 as against the registered 19 million taxpayers. However, the chairman said the filers were 1.7 million more than September last year. The poor response to the traders' scheme coincided with the close of the first quarter of the current fiscal year and the FBR managed to meet the quarterly target of Rs3.03 trillion, strengthening its bargaining position with the International Monetary Fund (IMF). However, the overall return filers were 5.7 million until the statutory deadline compared to the 19 million registered taxpayers. Headed by Senator Saleem Mandviwalla of the PPP, the Senate Standing Committee on Finance got a detailed briefing from Minister of State for Finance Bilal Azhar Kayani and the FBR chairman on the new fixed tax scheme. "We are worried that the response to the tax scheme remained below our expectations," said Langrial while responding to a question. FBR's Member Operations Zubair Bilal said so far 787 tax returns had been filed under the new scheme, of which only four were new filers. But Kayani, the main architect of the scheme, was hopeful that the scheme would pick up momentum once the FBR started chasing the traders. He revealed that there were technical glitches in the application launched to facilitate the first-time filers. "If the traders do not opt for the scheme and even the fines prove insufficient to convince them, then strong enforcement measures would have to be taken," said Kayani, hoping that the FBR would now go to the field to create awareness of the new scheme. When the committee decided to review the implementation status after one month, Langrial responded that there was a possibility that the situation might remain the same. "Good faith has been defeated" by the traders, he said, adding that glitches in filing applications were merely an excuse for not filing the returns. The government had launched the 1% fixed tax scheme, offering retailers to pay a nominal tax in return for complete exemption from audit and installation of Point of Sales. It was the best-ever scheme offered to any segment in the country, remarked Kayani. "The traders' issue dates back to before my birth and the new scheme is still at the initial stage," he said, hoping that the response would grow once the government started imposing fines. To a question from PML-N Senator Anusha Rahman about whether the FBR had prepared a list of non-compliant traders, FBR's Member Strategic Transformation Dr Hamid Ateeq Sarwar only said all those who would not file returns would be chased. To another question, Sarwar said the government was targeting to bring 500,000 to 1 million traders into the tax net out of the 3.7 million who were outside the system. Responding to a query about collecting Rs50 billion from traders in the current year, the FBR chairman said if the scheme remained successful, the collection should be over Rs100 billion but if it failed, there would be negligible payments. Kayani stated that the government had consulted the traders and introduced the scheme accordingly. He added that within two months, 10,338 retailers registered through the application, covering traders with annual sales of up to Rs200 million. Of these, 2,337 were new but only a very few filed 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 stage and Rs50,000 at the third stage. The FBR chairman stressed that extensive awareness campaigns had already been launched and noted that there was still a perception among some traders that those who did not register through the application would not face penalties. Meanwhile, the government on Wednesday extended the statutory date for filing income tax returns for tax year 2026 by 15 days to October 15 because of requests from various trade bodies and tax bar associations. Taxpayers faced a lot of problems in filing returns due to glitches in the system developed by the Pakistan Revenue Automation Limited (PRAL). The FBR received 5.7 million tax returns compared to the total of 8.5 million returns filed last year, representing a decrease of 32%. But Zubair Bilal said the filers were 1.7 million higher when compared with September 30, 2025. Tax collection The FBR bagged Rs3.078 trillion in taxes during the July-September quarter of the current fiscal year, surpassing the target by Rs25 billion. However, the key reason for achieving the target was a very low benchmark as the increase was hardly 6.5% over the same period of last year. For the current fiscal year, the government and the IMF have given a Rs15.263 trillion annual tax target to the FBR. This requires a 17.4% growth over last year's collection. Unlike in the past, the IMF has made it binding to meet the tax targets and its approval of the sixth loan tranche will be contingent upon achieving the first-half target. According to the provisional figures, the tax machinery received over Rs1.432 trillion inn income tax, falling short of the three-month target by Rs52 billion. For the third consecutive month, sales tax collection remained higher than the target. The FBR got Rs1.14 trillion worth of sales tax, exceeding the target by Rs85 billion. Federal excise duty collection stood at Rs197 billion, which was almost equal to the target. Customs duty collection reached Rs312 billion, lower by Rs8 billion than the target.