FBR Announces New Fixed Tax Plan for Small Retailers

The Federal Board of Revenue (FBR) recently unveiled a draft for a new fixed tax scheme. This plan targets small shopkeepers across the country. Specifically, the FBR wants to bring over three million retailers into the tax net this fiscal year. Consequently, this move aims to broaden Pakistan\’s tax base significantly.

New Tax Rules for Small Businesses

The FBR issued this proposal through SRO 1109(I)/2026. Furthermore, the scheme falls under Section 99B of the Income Tax Ordinance, 2001. The authorities have now invited stakeholders to share their feedback. Therefore, people can submit objections or suggestions within seven days of the official Gazette publication. This step must happen before the government finalizes the entire procedure.

Under this new framework, the scheme applies to individual retailers with specific limits. For instance, their annual turnover must not exceed Rs200 million. Eligible shopkeepers can choose to pay a fixed income tax. This tax equals one percent of their gross annual turnover. However, they must pay a minimum amount of Rs25,000.

Who Is Eligible for the Scheme?

Not every business can join this simplified tax system. For example, the draft excludes businesses with very high revenues. Specifically, it excludes those whose turnover exceeded Rs200 million in any of the last three tax years. In addition, owners of multiple shops are not eligible. Tier-I retailers and jewellery sellers are also excluded from this plan.

Moreover, certain professionals cannot participate in this scheme. This includes doctors, engineers, and lawyers. The plan also excludes individuals who earn income from multiple different sources. Consequently, the scheme focuses strictly on small-scale retail operations.

How to Register and Comply

Retailers can register for this scheme quite easily. They can use the FBR\’s IRIS web portal for registration. Alternatively, they can use the dedicated mobile application. They may also visit a local tax office for help. Notably, participation remains entirely voluntary for all eligible shopkeepers. Therefore, they can choose between this fixed system and regular tax returns.

The proposal also offers a way to manage existing taxes. For instance, retailers can adjust withholding tax against their total liability. However, the FBR will not issue refunds if the withheld amount is too high. Additionally, participants must pay at least Rs25,000 in cash when they file their returns.

Benefits of the Fixed Tax System

This new plan offers a major benefit for small business owners. Specifically, shopkeepers using the fixed tax scheme will generally avoid tax audits. As a result, these businesses enjoy a much simpler tax process. This makes tax compliance more predictable for everyone involved.