The Federal Board of Revenue (FBR) has introduced a simplified and voluntary income tax framework for small shopkeepers, aiming to broaden the national tax base. The draft Special Procedure for Small Shopkeepers (S.R.O. 1109/2026), released on Tuesday, offers participants exemptions from routine audits, withholding tax responsibilities, and mandatory digital invoicing requirements.
The FBR currently invites the public to submit objections and suggestions regarding the proposal.
Under the proposed regime, individual retailers with an annual turnover of up to Rs200 million may opt to pay income-tax at a rate of one percent of their gross turnover, rather than filing returns under the standard taxation system.
Participants are required to pay a minimum cash tax of Rs25,000, and any excess withholding tax collected at source will not be refundable. The scheme remains optional, allowing eligible individuals the choice to join the simplified framework or continue filing regular returns.
Shopkeepers can register for the program through the FBR’s IRIS (Integrated Revenue Information System) portal, a mobile application, or by visiting local tax offices following the regular protocol.
Participation excludes retailers whose turnover exceeded Rs200 million in any of the previous three years, those owning more than one shop, Tier-1 retailers, jewellers, and professionals such as doctors, engineers, and lawyers. Furthermore, individuals who filed returns for 2025 may only join if their tax liability is not lower than the previous year and they have not renamed or split their businesses to qualify.
To incentivize participation, the FBR plans to issue a “Green Plate” to compliant shopkeepers. The plate will feature a QR code containing business details, and officials are barred from entering the premises of retailers displaying the plate for tax-related matters.
Conversely, non-compliance carries escalating penalties of Rs10,000, Rs25,000, and Rs50,000 for the first, second, and third defaults, respectively.
