New App Helps Small Retailers Enter Tax Net

ISLAMABAD: Small retailers currently outside Pakistan’s formal tax system can now register as taxpayers and file their income tax returns through the newly introduced Retailer Scheme App using their mobile phones.

Minister of State for Finance Bilal Azhar Kayani announced the launch at a press conference in Islamabad alongside Federal Minister for Finance Muhammad Aurangzeb on Wednesday.

Kayani said the mobile application has been developed specifically to make tax registration and filing easier for small shopkeepers who have not yet entered the formal tax net. Through the platform, eligible retailers will be able to complete the required filing process directly from their phones.

Under the simplified scheme, the government has set a minimum annual tax liability of Rs25,000 for participating small retailers. Shopkeepers covered by the scheme will also not be required to install or operate Point of Sale (POS) systems.

The minister said the application is expected to support local languages by the first week of September, making the platform more accessible to retailers across the country.

Finance Minister Muhammad Aurangzeb said the retailer tax scheme has been simplified and made optional for small shopkeepers. Retailers who choose to continue operating under the standard tax regime will remain free to do so.

He said the application was developed following consultations with relevant stakeholders and stressed that Pakistan’s tax system cannot achieve broader coverage while significant portions of economic activity remain outside the formal tax framework.

The government initially introduced the fixed tax arrangement for small retailers in June as part of efforts to expand the country’s narrow tax base. Under the scheme, eligible retailers with annual sales of up to Rs200 million are required to pay tax equivalent to 1% of their declared yearly turnover.

Retailers seeking to enter the simplified regime only need to submit a one-page declaration and pay the applicable tax according to the prescribed rate.

In addition to being exempt from POS requirements, participating retailers will not be subjected to routine tax audits or withholding-agent obligations. Taxes already deducted through utility bills and other sources can also be adjusted against their overall tax liability.

Aurangzeb identified simplification of the taxation process as a major government objective and encouraged small retailers to take advantage of the new mechanism.

Kayani said successful implementation of the scheme could potentially bring millions of traders into the formal tax system while helping reduce the relative tax burden faced by salaried taxpayers.