Govt Decides to Curb Cash Economy, Expand Documentation Under IMF Pressure; Tough Tax Targets Set

Islamabad: Under pressure from the International Monetary Fund (IMF), the federal government has decided to reduce the cash-based economy and expand documentation, while setting strict tax collection targets following the failure of the trader-friendly scheme.

According to sources, in line with IMF demands to curb cash transactions and enhance documentation in the retail sector, the government has set a tax collection target of Rs517 billion from large traders by March 2026. The Federal Board of Revenue (FBR) has also finalized stringent measures to bring retailers into the tax net.

Sources said that income tax collection of Rs707 billion from large retailers has been targeted by June 2026. Non-filer retailers will face penalties and legal action as part of the enforcement drive.

To boost sales tax collection, the FBR plans to make digital receipts and Point of Sale (POS) systems mandatory. Traders with an annual turnover of Rs500 million will be required to adopt a digital invoicing system by June 2026.

The IMF has also imposed a condition to limit outstanding tax refund liabilities. Officials stated that POS systems have already been installed at 38 percent of large retail outlets. Over the next two years, the government aims to install POS systems at all 40,000 large retailers across the country.

Additionally, a plan is in place to track retailers through bank accounts and utility bills. Sources also revealed that proposals are under consideration to disconnect electricity and gas connections of shopkeepers who fail to pay taxes, as part of the government’s effort to enforce compliance and increase revenue collection.