FBR plans crackdown on 1.4 million unregistered retailers

Government identifies 6,000 retailers for initial enforcement, plans penalties for non-compliance and considers disconnection of electricity and gas supplies as last resort The Federal Board of Revenue (FBR) is preparing to launch a phased enforcement drive against unregistered retailers under the Asaan Tax Scheme, initially targeting 6,000 shopkeepers before expanding action to 1.4 million retailers whose identity and utility records are available with the tax authority. Minister of State for Finance Bilal Azhar Kayani informed the National Assembly Standing Committee on Finance on Tuesday that the government had decided to impose penalties on retailers who failed to register under the scheme after its voluntary registration drive received a weaker-than-expected response. The government has data on approximately 3.7 million retailers across the country, collected primarily through commercial electricity meters of power distribution companies (DISCOs). Of these, the FBR has computerised national identity card (CNIC) and utility information for 1.4 million shopkeepers, which will be used for enforcement. According to sources, physical mapping of 6,000 retailers in newly identified markets and locations has already been completed, and these businesses will be the first to face enforcement action. The FBR intends to bring the identified 1.4 million retailers into the tax registration system by June 2027 through a phased campaign. Sources said the government was also considering amendments to the Asaan Tax Scheme to facilitate enforcement against small shopkeepers. As a last resort, authorities could consider disconnecting electricity and gas connections of retailers who persistently refuse to register despite enforcement notices and penalties. However, this measure remains an option under consideration rather than an announced enforcement action. Briefing the committee, chaired by Syed Naveed Qamar, Kayani acknowledged that the response to the scheme had fallen short of government expectations despite consultations with trade representatives and concessions made to facilitate registration. He said the scheme had been finalised after discussions with business and trade organisations, with the government accepting their demands to encourage participation. The minister explained that retailers had initially been offered the opportunity to register under the normal tax regime, while the Asaan Tax Scheme provided an additional simplified mechanism for entering the tax net. Although some retailers had registered, a substantial number remained outside the system, prompting the government to move towards compulsory enforcement. Kayani said penalties had already been determined when the scheme was introduced, and the government would now proceed against businesses that had not taken advantage of the registration facility. He also acknowledged that many retailers were reluctant to register with the FBR because they feared additional complications after entering the tax system. The minister maintained that the government had addressed the concerns raised by trade representatives, but tax non-compliance remained widespread. He sought parliamentary support for effective implementation of the scheme and informed the committee that the proposed enforcement plan would be submitted to the prime minister once finalised. The complete mechanism for action against non-compliant retailers would also be shared with the standing committee within a few days. During the meeting, Committee Chairman Syed Naveed Qamar questioned the effectiveness of the registration drive, recalling that the government had initially expected approximately 80% of retailers to register under the scheme. He sought details of the proposed enforcement mechanism and questioned how the government intended to proceed against businesses that had failed to register voluntarily.