FBR issues fixed tax scheme draft for small shopkeepers

• Scheme applies to retailers with turnover up to Rs200m.
• Registration available through IRIS portal or mobile application.
• Scheme optional; shopkeepers may file regular return instead.

ISLAMABAD: The Federal Board of Revenue (FBR) has issued a draft special procedure for small shopkeepers, proposing a fixed tax scheme at 1% of gross annual turnover with a minimum payment of Rs25,000, aimed at bringing more than three million retailers into the tax net during the current fiscal year, The News reported. 

According to Statutory Regulatory Order (SRO) 1109(1) 2026, the draft Special Procedure for Small Shopkeepers, which the FBR proposes to prescribe under Section 99B of the Income Tax Ordinance, 2001 (XLIX of 2001), has been published for information of all persons likely to be affected by it.

As required under sub-section (3) of Section 237, the FBR has invited objections or suggestions regarding the draft within seven days of its publication in the official Gazette.

The draft is titled the “Draft Special Procedure for Small Shopkeepers”. This will apply to individuals earning income mainly through retail shops with annual turnover of up to Rs200 million. It will apply for the tax year 2026.

The scheme will not apply to individuals whose turnover exceeded Rs200 million in any one of the preceding three years; those owning more than one shop; Tier-I retailers; sellers of jewellery; and providers of professional services, including doctors, engineers and lawyers. It will also not apply where shop income is combined with other sources of income.

Retailers who filed a return for tax year 2025 may also file a return under this special procedure for small shopkeepers, provided their payable tax is not lower than their tax liability for 2025 and they have not split up or renamed their business to benefit from the scheme.

Shopkeepers may register with the FBR through the IRIS web portal, the shopkeepers’ mobile application, or by visiting the nearest tax office for assistance with registration.

The procedure will remain optional, and a shopkeeper may either pay tax under this scheme or file a regular income tax return. Tax will be charged at the rate of 1% of gross turnover.

Shopkeepers may deduct withheld income tax from their payable amount. However, if withholding tax collected exceeds the minimum tax payable under this procedure, no refund will be issued.

To avail this special procedure, shopkeepers must pay a minimum of Rs25,000 in cash along with their income tax return, regardless of any tax deduction or collection at source under the ordinance.

The tax payable after deduction of withholding tax, or Rs25,000 — whichever is higher — will be considered the final tax payable.

Shopkeepers opting for this special procedure will generally not be subject to audit.