ISLAMABAD: The government’s campaign to bring large retailers into the tax system gained pace again during the last financial year, taking the number of businesses linked to the Federal Board of Revenue’s Point of Sale system to 17,337.
According to FBR data, the number of large retailers integrated with the POS system rose by 4,124 during 2025-26 — an increase of approximately 31 per cent in a single year.
The scheme to link large retailers to the POS system was introduced in December 2019. A charge of one rupee is also collected by the FBR on every purchase receipt issued through POS, which tax authorities say is used for the welfare of officers.
According to official figures, the FBR collected Rs871 million from POS receipts during the last financial year, roughly 17 per cent more than in the preceding year.
Under the POS regime, a bill is issued electronically from the shop or business centre and a copy is simultaneously received by the FBR.
This makes it difficult for a business to subsequently declare a lower volume of sales, because the record of the transaction is already held by the tax authority.
However, a new scheme introduced by the government for small traders has raised questions about the process of digital documentation in the retail sector. The new scheme creates room for small traders to record annual sales of up to Rs200 million relative to the earlier threshold. Under it, small traders will be charged tax at only one per cent of their annual sales.
According to the FBR, the one-third increase in the number of retailers linked to the POS system was accompanied by a significant increase in tax collected from them. Rs132 billion in tax was received from these retailers during the last financial year.
Officials say new withholding tax thresholds fixed under sections 236G and 236H of the Income Tax Ordinance also expanded the scope of the POS network. The FBR’s focus is particularly on restaurants and on textile and garment outlets. A large number of service-providing businesses, however, remain outside the tax net.
According to tax officials, doctors and other professional service providers are unwilling to declare actual income and transactions, and are resisting the linking of clinics and hospitals to the electronic billing system.
FBR officials say electronic billing is a uniform standard and is not intended to target any particular profession, adding that including shopkeepers and restaurants in the system has produced a marked increase in tax liabilities.
The tension in this story is between two policies pointing in opposite directions, and the FBR’s own data makes it visible.
POS integration is a documentation instrument: its purpose is to create an unalterable record of sales so that turnover cannot be understated. The small traders’ scheme is a simplification instrument: its purpose is to bring the undocumented into the net by taxing turnover at a flat rate with minimal compliance burden.
Both are defensible in isolation. Together, they create an incentive problem. A business assessed at one per cent of declared turnover, up to a Rs200 million threshold, has a strong reason to remain below that threshold and outside POS integration — and no equivalent reason to accept electronic invoicing. Pakistan has run fixed-tax and simplified schemes for retailers repeatedly since the 1990s, and the recurring finding is that they raise little revenue while eroding the documentation drive running alongside them.
The one-rupee-per-receipt levy also merits scrutiny. Rs871 million, hypothecated to the welfare of tax officials rather than the exchequer, is an unusual fiscal arrangement, and the case for it should be made publicly rather than noted in passing.
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