FBR small shopkeepers scheme: 1% of turnover, return due 15 October

As read on 14 October 2026. This explains a notification. It is not tax advice.

The Federal Board of Revenue (FBR) has notified an optional tax scheme for small retail shopkeepers, and the date to file under it is close. The Tax Year 2026 return date was extended to 15 October 2026, per FBR’s notification as reported by The Nation and The Express Tribune and stated in an FBR video; FBR’s own written notice was not read. The scheme’s notification refers only to “the due date”.

What the notification says

S.R.O. 1166(I)/2026, dated 27 July 2026, makes the “Special Procedure for Small Shopkeepers” under section 99B of the Income Tax Ordinance, 2001. It follows draft S.R.O. 1109(I)/2026 of 14 July. The Finance Act 2026 widened section 99B so that such a procedure can cover the rate, fixed tax and audit. These are the notification’s own words on the main points.

Who it applies to (paragraph 1):

“This special procedure shall apply to Individuals earning income mainly through retail shops with annual turnover up to PKR 200 million. This special procedure shall apply for tax year 2026.”

Exclusions (paragraph 2):

“This procedure shall not apply to – (i) Individuals whose turnover exceeded PKR 200 million in any one of the preceding 3 years; those owning more than one shop; Tier-1 retailers; sellers of jewellery; and providers of professional services (e.g. doctors, engineers, lawyers); and (ii) This procedure applies only to shop income – other sources of income are excluded. Retailers who filed a return for tax year 2025 may also file a return under this Special Procedure for small shopkeepers, provided their payable tax is not lower than in 2025, and they have not split up or renamed their business to avail this special procedure.”

Tax rate (paragraph 5):

“Tax shall be charged at the rate of 1% of gross turnover. Shopkeepers may deduct withheld income tax from their payable amount. However, if withholding tax collected exceeds the minimum tax payable under this procedure, no refund shall be issued.”

Minimum tax (paragraph 6):

“To avail this special procedure, the shopkeepers must pay a minimum of PKR 25,000 in cash along with return of income regardless of any tax deduction or collection at source under the Ordinance. Tax payable (less withholding) or PKR 25,000 whichever is higher shall be the tax payable.”

Penalty steps (paragraph 10, “Default Surcharge”):

“If a shopkeeper neither files a regular income tax return nor opts for this special procedure by the due date, penalties of PKR 10,000 on the first default, PKR 25,000 on second default, and PKR 50,000 on third default shall be imposed. There shall be a gap of at least one month between each default proceedings.”

In summary, the other paragraphs say the procedure is optional, with a regular return as the alternative. A simplified return is filed on the IRIS portal or the shopkeepers’ mobile application, in Urdu and regional languages. Participants generally face no audit, and proceedings can start only in consultation with trade associations. They need not withhold tax under section 153 or install a sales tax point-of-sale system. Qualifying shopkeepers who opt in are issued a “Green Plate” with an FBR QR code, name, NTN and address.

How to register

The notification names three routes: the IRIS web portal, the shopkeepers’ mobile application, or the nearest tax office. FBR’s video gives a helpline, 051 111 772 772, and helpline@fbr.gov.pk.

Does it affect property?

Only where the notification says so:

• It applies to shop income only. It says other sources of income are excluded, and it does not mention rent, so it does not say how a shopkeeper’s rental income is taxed.
• It excludes those “owning more than one shop”. It does not say whether that includes a landlord who rents out a second shop.
• The simplified return asks for non-movable property among the assets declared. The notification also lets proceedings start on third-party information about the “acquisition or ownership of expensive assets”.
• It does not mention builders, developers or property dealers, rent paid by tenant shopkeepers, or the taxes on buying and selling property such as sections 236C and 236K, which we cover here.

What to check

Confirm eligibility and the current date with FBR before filing. We did not read FBR’s own extension notice. The PDF’s file name says “Draft”, but its text is the notification of 27 July. The annex form is headed “Tax Year 2025”, while the notification says tax year 2026.