Pakistan’s government has proposed a fixed tax system for traders as part of the federal budget for 2026-27, aiming to simplify taxation for small businesses and improve voluntary compliance.
Presenting the budget, Finance Minister Muhammad Aurangzeb said the proposed scheme would reduce regulatory hurdles and make the tax system easier for traders and shopkeepers to understand and follow.
According to budget documents, the new mechanism has been introduced under Section 1993 of the Income Tax Ordinance.
Under the proposal, shopkeepers and small business owners with annual sales of up to Rs50 million will qualify for the fixed tax regime.
The government said the initiative is designed to provide a predictable and straightforward taxation framework for small-scale businesses. It also aims to encourage greater participation in the formal economy and improve tax documentation across the retail sector.
Officials believe the simplified tax structure will make compliance easier for traders while reducing unnecessary administrative complexities.
The proposal is part of the government’s broader efforts to expand the tax base and create a more business-friendly environment for small enterprises.