After the failure of the trader-friendly Tajir Dost scheme, Pakistan has introduced a strict new strategy to boost tax collection from the retail sector under mounting pressure from the International Monetary Fund (IMF) to curb the cash economy and accelerate trader documentation.
According to official documents, the IMF has demanded urgent measures to reduce cash-based transactions and speed up the registration of wholesale and retail traders, linking these reforms to Pakistan’s broader economic stabilisation programme. The global lender has stressed that improved documentation is critical for sustainable revenue growth.
The government has set ambitious tax targets for the sector. A revenue goal of Rs517 billion from traders has been fixed by March 2026, while Rs707 billion in income tax is to be collected from large retailers by June 2026. These targets are part of the Federal Board of Revenue’s (FBR) revised annual tax collection target of Rs13,979 billion.
FBR documents show that non-filer retailers will face fines and legal action, with authorities planning to intensify pressure on unregistered traders while offering incentives to compliant businesses. Retailers remaining outside the tax net may also face enforcement actions under existing laws.
To strengthen sales tax collection, the government has made digital receipts and Point of Sale (POS) systems mandatory. A digital invoicing system will become compulsory for traders with an annual turnover of Rs500 million by June 2026. Currently, POS systems cover 38 percent of large retailers, with plans to expand coverage to 40,000 major outlets within two years.
Under the new framework, retailers will be monitored through bank accounts and utility bills to better detect tax evasion. Official documents also reveal proposals to disconnect electricity and gas connections of shopkeepers who fail to meet tax obligations, signalling a tougher enforcement phase.
The FBR has accelerated field surveys to identify undocumented businesses, while remote monitoring systems have been activated in sectors such as cement and sugar to prevent revenue leakage.
As part of IMF-backed reforms, the government aims to add one million new income tax filers by June 2026, increasing annual return filers from 5.2 million to 7 million. Provincial governments have also been tasked with raising tax collections to Rs785 billion by March 2026 and Rs1,190 billion by June 2026.
Following the collapse of the voluntary Tajir Dost scheme, officials say the shift toward enforcement-led reforms is unavoidable to stabilise Pakistan’s finances and meet IMF commitments.
