The Federal Board of Revenue (FBR) has released a draft of a new fixed tax scheme for small shopkeepers, aiming to expand Pakistan’s tax base by bringing more than three million retailers into the tax net during the current fiscal year.
Issued through SRO 1109(I)/2026, the proposed scheme has been introduced under Section 99B of the Income Tax Ordinance, 2001. The FBR has invited stakeholders to submit objections and suggestions within seven days of the draft’s publication in the official Gazette before the procedure is finalised.
Under the proposed framework, the scheme will apply to individual retailers whose annual turnover does not exceed Rs200 million. Eligible shopkeepers will have the option to pay a fixed income tax equal to one percent of their gross annual turnover, subject to a minimum payment of Rs25,000.
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The draft excludes businesses whose turnover exceeded Rs200 million in any of the previous three tax years, owners of more than one shop, Tier-I retailers, jewellery sellers, and professionals such as doctors, engineers and lawyers. It will also not apply to individuals earning income from multiple sources alongside retail business.
Retailers can register for the scheme through the FBR’s IRIS web portal, the dedicated mobile application, or by visiting the nearest tax office for assistance. Participation in the scheme will remain voluntary, allowing eligible shopkeepers to choose between the fixed tax system and the regular income tax return process.
The proposal also allows retailers to adjust withholding tax already deducted against their tax liability. However, if the withheld amount exceeds the payable tax, no refund will be issued. To qualify for the scheme, participants must pay at least Rs25,000 in cash when filing their income tax return.
A key feature of the proposed procedure is that shopkeepers opting for the fixed tax scheme will generally not be selected for tax audits, providing eligible businesses with a simplified and more predictable tax compliance process.