Key Takeaways
- The Federal Board of Revenue (FBR) has proposed a simplified tax regime for small shopkeepers.
- Individual retailers with an annual turnover up to Rs200 million will have the option of paying one per cent of their gross turnover as income tax.
- Retailers opting in will be exempt from routine audit and digital invoicing.
The Federal Board of Revenue (FBR) has proposed a simplified and voluntary income tax regime for small shopkeepers, aiming to broaden the country’s narrow tax base. Under this proposal, individual retailers with an annual turnover up to Rs200 million will have the option of paying one per cent of their gross turnover as income tax instead of filing returns under the normal taxation regime.
The draft Special Procedure for Small Shopkeepers was issued on Tuesday and is set to be finalised within a week after receiving public objections and suggestions. The scheme offers significant exemptions, including exemption from routine audit and digital invoicing requirements. However, participating retailers will have to pay a minimum cash tax of Rs25,000 even if taxes already deducted at source exceed their liability.
The proposal is part of the government’s broader strategy to encourage more small traders to comply with tax laws. Registration for the simplified regime can be done through the FBR’s IRIS portal, a dedicated mobile application, or at tax offices. The scheme excludes retailers whose turnover exceeded Rs200 million in any of the preceding three years, owners of more than one shop, tier I retailers, jewellers, and professionals such as doctors, engineers, and lawyers.
To encourage participation, the FBR has proposed that retailers opting for the scheme would generally remain outside the routine audit framework. However, departmental proceedings could only be initiated after consultation with representatives of trade associations and where third-party information relating to significant economic transactions or misuse of the scheme is received by tax authorities.
The proposal also introduces escalating penalties for non-compliance. Retailers who file returns under this simplified regime will not be required to install point-of-sale systems or digital invoicing infrastructure. Instead, they will be required to declare annual sales, purchases, business expenses, net profit, other income, and assets through a simplified tax return form available on the IRIS portal and mobile application in Urdu and regional languages.
To further encourage compliance, the FBR plans to issue qualifying retailers a ‘Green Plate’ carrying a QR code, the taxpayer’s name, National Tax Number, and business address. According to the draft, FBR officials would not enter the premises of bona fide retailers displaying the plate for tax-related matters.
