The Federal Board of Revenue (FBR) has notified the Special Procedure for Small Shopkeepers for Tax Year 2026, introducing a simplified tax compliance framework aimed at bringing more retailers into the country’s tax system.
The scheme applies to individuals earning income exclusively from retail shop operations with an annual turnover of up to Rs. 200 million. It is designed to make tax registration and filing easier for small businesses while encouraging voluntary compliance.
The new procedure does not apply to retailers whose annual turnover exceeded Rs. 200 million in any of the previous three tax years. It also excludes owners of more than one retail shop, Tier I retailers, jewellery sellers, and professionals such as doctors, engineers, and lawyers.
Eligible shopkeepers can register through the IRIS web portal, the Shopkeepers’ Mobile Application, or by visiting their nearest tax office. Participation in the scheme is voluntary, allowing retailers to either opt for the simplified procedure or continue filing regular income tax returns.
Retailers choosing the scheme will be allowed to adjust withholding tax against their tax liability. However, they must pay a minimum of Rs. 25,000 in cash with their annual tax return, even if their withholding tax exceeds the amount payable. Any excess withholding tax will not be refunded.
According to the FBR, participants in the scheme will generally not be subject to tax audits. Investigations may only be launched, after consultation with trade associations, if third-party information indicates significant financial transactions, ownership of high-value assets, or misuse of the scheme for tax avoidance.
Under the simplified procedure, retailers will file an easy tax return declaring sales, purchases, expenses, net profit, and assets. The return form will be available in Urdu and regional languages. Participants will also be exempt from installing sales tax point-of-sale systems or digital invoicing infrastructure.
The scheme also exempts eligible shopkeepers from withholding tax obligations under Section 153 and the minimum tax provisions under Section 113 of the Income Tax Ordinance.
Retailers who neither file a regular income tax return nor opt into the new scheme by the due date will face penalties. The first default will attract a fine of Rs. 10,000, followed by Rs. 25,000 for the second default and Rs. 50,000 for the third, with at least one month between each penalty proceeding.
Shopkeepers participating in the scheme will receive an FBR Compliant Shopkeeper Plate, also known as the Green Plate. It will feature a QR code, the shopkeeper’s name, National Tax Number, and business address. The FBR said tax officials will generally not enter shops displaying the Green Plate for matters covered under the special procedure.
Also read: FBR Raids Tehzeeb Bakery during Islamabad Tax Crackdown
