06/06/2026
*Fixed Tax Scheme for Small Shopkeepers*
**Key Points**
1. **Applicability for 2026:** Annual turnover up to 200 million PKR, and proof of shop ownership or tenancy.
2. **Conditions:** Those with an annual turnover of more than 200 million PKR in any of the last 3 years, those with more than one shop, those with credit card machines, Tier-1 retailers, and service providers (such as doctors, engineers, lawyers) are not included in this scheme. This scheme applies to income from shop operations, not other sources of income.
3. Those small shopkeepers who have filed a return for the year 2025 can also join under these conditions.
4. If the taxable income is less than what was declared for the year 2025, do not attempt to take advantage of the scheme by dividing the business or changing the name (registration assistance is available).
5. **Registration:** Register via the FBR (IRIS) web portal, mobile app, or nearest tax office.
6. **Nature of Scheme:** This scheme is optional. Shopkeepers will pay fixed tax based on turnover or file a regular return. A penalty will be imposed for non-compliance.
7. **Tax Rate:** A 1% fixed tax on total turnover will apply. Shopkeepers can deduct withholding tax from their payable amount. However, if the withholding tax collected is more than the minimum tax payable under this scheme, no refund will be given.
8. **Minimum Tax:** For inclusion in this scheme, shopkeepers will pay a minimum of 25,000 PKR annually (excluding withholding tax).
9. **Audit:** A shopkeeper opting for the scheme will generally not be audited. An audit will only be conducted after consultation with trade organizations in specific cases (e.g., significant economic activity, acquiring expensive assets, or serious misuse of the scheme).
10. **Filing of Returns:** Shopkeepers will file a simple return including total sales, total purchases, other expenses, and net profit. This simplified form is available for the convenience of shopkeepers to declare their legitimate assets.
11. **Withholding and Other Deductions:** Under this scheme, small shopkeepers will not be responsible for withholding tax on the purchase of goods and services. The 1.5% minimum tax on turnover under the Income Tax Ordinance will also not apply.
12. **Penalty:** If a small shopkeeper does not file a regular income tax return and does not opt for the fixed tax scheme, a monthly penalty of 10,000 PKR, 25,000 PKR, and 50,000 PKR, respectively, will be imposed.
13. **Exemption from POS/Digital Invoicing:** Small shopkeepers who are bona fide participants in this scheme will not be required to install the Point of Sale (POS) and digital invoicing system.
14. **Income Earned (Appellable Income):** The shopkeeper has the right to declare their income according to the tax paid.
15. Participants in this scheme will be issued a nameplate by the FBR, which will be displayed outside the shop. Tax officials will not enter the shop to conduct routine inquiries or audits in the presence of this nameplate.
**Important Clarification:** It is clarified that this scheme does not apply to roadside vendors/hawkers.
Aziz Law Company
Advocates ,Tax & corporate Consultants
office No.01,second floor sadiq plaza ,The Mall Road ,Lahore .
