Islamabad: The Federal Board of Revenue (FBR) has proposed a simplified voluntary fixed tax scheme for small retailers, aiming to bring more than three million shopkeepers into the tax net during the current fiscal year.
The draft procedure, issued through SRO 1109(I)/2026, has been released for public consultation, with stakeholders invited to submit objections and suggestions within seven days before the scheme is finalised. It will apply to tax year 2026.
The proposed regime will cover individual retailers operating a single shop with annual turnover of up to PKR 200 million. It will not apply to retailers with turnover exceeding the threshold in any of the previous three years, owners of multiple shops, Tier-1 retailers, jewellery sellers or providers of professional services.
Under the proposal, eligible retailers will pay income tax at 1% of their gross annual turnover. They may adjust withholding tax already deducted against their liability, but the final tax payable cannot be less than PKR 25,000, which must be paid with the income tax return.
Retailers will be able to register through the FBR’s IRIS portal, a dedicated mobile application or designated tax offices. Participants will file a simplified annual return declaring sales, expenses, income and assets.
The FBR has proposed several compliance incentives under the scheme. Participating retailers will generally not be selected for audit unless credible third-party information indicates possible tax evasion or misuse of the scheme. They will also be exempt from certain withholding tax obligations and from installing sales tax point-of-sale or digital invoicing systems.
The FBR said retailers who do not file a regular income tax return or opt for the special procedure by the due date will face financial penalties in accordance with the proposed framework.
The tax authority said feedback received during the consultation period will be considered before the scheme is finalised.
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