ISLAMABAD: The Federal Board of Revenue (FBR) has released a draft plan offering small shopkeepers a simplified tax option, charging a flat 1% of their annual turnover with a minimum payment of Rs25,000.
The move is aimed at pulling more than three million retailers into the formal tax system during the current fiscal year of 2026-2027. The draft, issued under Statutory Regulatory Order (SRO) 1109(1) 2026, has been published for public review under Section 99B of the Income Tax Ordinance, 2001. It is officially titled the “Draft Special Procedure for Small Shopkeepers.”
As required by law, the FBR has opened a seven day window from the date of publication in the official Gazette for the public to submit objections or suggestions on the draft. The scheme applies to individuals who earn most of their income through retail shops, with annual turnover of up to Rs200 million, because it covers tax year 2026.
Certain groups are excluded from the scheme. These include shopkeepers whose turnover exceeded Rs200 million in any of the past three years, those who own more than one shop, Tier-I retailers, jewelery sellers, and professionals such as doctors, engineers, and lawyers, the scheme also won’t apply if shop income is combined with income from other sources.
Retailers who already filed a return for tax year 2025 can still opt into this scheme, as long as the tax owed under the new procedure isn’t lower than what they paid in 2025, and they haven’t split or renamed their business to take advantage of the scheme.
Shopkeepers can register through the FBR’s IRIS web portal, a dedicated mobile app for shopkeepers, or by visiting their nearest tax office for assistance. Participation is optional, shopkeepers can either use this simplified scheme or file a standard income tax return.
Shopkeepers can subtract any income tax already held from their total payable amount. However, if the withheld tax exceeds the minimum required under this scheme, no refund will be given.
To use this option, shopkeepers must pay at least Rs25,000 in cash along with their tax return, regardless of any tax already deducted or collected. Which ever amount is higher, the tax owed after subtracting withheld tax or the Rs25,000 minimum, will count as the final tax payable, shopkeepers who choose this scheme will generally be exempt from audits.
