FBR notifies revised tax regime for small retailers

The Federal Board of Revenue (FBR) has introduced a simplified and voluntary income tax regime for small shopkeepers, offering exemptions from routine audits, withholding tax obligations, and mandatory digital invoicing to encourage greater tax compliance.

 

Under the new scheme, individual retailers with an annual turnover of up to PKR 200 million can opt to pay income tax equal to 1% of their gross turnover instead of filing returns under the standard tax regime. However, participants must pay a minimum tax of PKR 25,000, with any excess tax deducted at source remaining non-refundable.

 

The scheme is optional, allowing eligible retailers to either join the simplified framework or continue under the existing tax system. Registration will be available through the FBR's IRIS portal, a dedicated mobile application, or tax offices.

 

The regime excludes retailers with annual turnover exceeding PKR 200 million in any of the previous three years, owners of multiple shops, tier-I retailers, jewellers, and professionals such as doctors, engineers, and lawyers.

 

To encourage participation, the FBR said businesses opting for the scheme will generally remain exempt from routine audits and withholding tax requirements on purchases. Departmental action will only be initiated in cases involving credible third-party evidence of significant transactions, ownership of high-value assets, or misuse of the scheme for tax evasion.