Small shopkeepers offered new 1% tax regime

June 12, 2026 (MLN): A new tax scheme targeting small shopkeepers has been launched by the federal government, under which retailers with annual sales of Rs200m or less will be liable to pay a fixed tax of one percent on their declared turnover.

Details of the initiative were shared at a press conference attended by Federal Finance Minister and Minister of State for Finance Bilal Azhar Kayani, who said the scheme was developed following consultations with business associations.

Under the arrangement, shopkeepers will fill out a multilingual form declaring their annual income and sales, on which the one percent fixed tax will be assessed.

Withholding tax already paid by shopkeepers through electricity or telephone bills will be adjustable against this liability. Where the withholding tax equals the fixed tax amount, a minimum payment of Rs25,000 will additionally be required.

Participation in the scheme is voluntary. Shopkeepers who enroll will receive an identification plate from the Federal Board of Revenue carrying the shop name, national tax number, and other details, along with a QR code accessible to FBR inspectors.

Registered shopkeepers will also remain eligible for additional benefits under the scheme, while those who prefer the existing tax framework may continue under it.

Both filers and non-filers are eligible to join. However, shopkeepers who neither enrol in this scheme nor participate in the regular tax system will face escalating penalties Rs10,000 in the first month, Rs25,000 in the second, and Rs50,000 in the third.

FBR Member Hamid Atiq Sarwar said there are approximately 4.4m shopkeepers across the country, of whom 3.5m fall in the small retailer category for whom the scheme has been designed.

Copyright Mettis Link News