The Federal Board of Revenue has proposed a small shopkeepers tax equal to 1% of annual gross turnover, with a minimum payment of Rs25,000 for tax year 2026.
The FBR issued the draft procedure through SRO 1109(I)/2026 under Section 99B of the Income Tax Ordinance, 2001. It invited objections and recommendations within seven days of publication in the official Gazette.
The proposed scheme would cover individuals earning most of their income from a single retail shop with an annual turnover of up to Rs200 million. The FBR aims to bring more than three million retailers into the tax system during the current fiscal year.
Participation would remain optional. Eligible shopkeepers could use the fixed tax procedure or file a regular income tax return.
The FBR draft said taxpayers could adjust income tax already withheld against their liability. However, they must pay at least Rs25,000 in cash when filing the return, regardless of deductions or tax collected at source.
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The final liability would be the amount remaining after withholding adjustments or Rs25,000, whichever is higher. Excess withholding would not qualify for a refund under the procedure.
The scheme would exclude people who own multiple shops, Tier-I retailers, jewellery sellers and professional-service providers, including doctors, engineers and lawyers. It would also exclude anyone whose turnover exceeded Rs200 million in any of the previous three years.
Shopkeepers could register through the FBR’s IRIS portal, a dedicated mobile application or their nearest tax office. Taxpayers who use the procedure generally do not face an audit.
