ISLAMABAD: The Federal Board of Revenue (FBR) has prepared a new scheme for small traders and shopkeepers, which is expected to be announced in the federal budget for fiscal year 2026–27.
The FBR is consulting stakeholders to seek comments on the proposed scheme.
READ MORE: Shopkeepers/traders: FBR mulling another registration scheme
Salient Features — Small Taxpayers Guidance System are as follows:
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Eligibility Based on Annual Turnover: The scheme is designed for small traders and shopkeepers with an annual turnover of up to approximately Rs20 million.
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Simplified Registration Criteria: Individuals who have operated a business for at least three years, maintain a shop or business premises, and belong to professions other than specialised services may qualify.
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Previous Taxpayers Can Also Join: Small taxpayers who were already filing tax returns before 2025 may also become part of this simplified scheme if they meet the required conditions.
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Easy Registration Process: Registration can be completed through the FBR IRIS web portal, mobile application, or through authorised tax practitioners and facilitators.
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Optional Participation: Joining the scheme is voluntary. However, participants are expected to maintain accurate and transparent financial records.
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Reduced Tax Rate: A lower and simplified tax rate may apply to eligible small taxpayers under the scheme compared to standard taxation procedures.
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Minimum Income Threshold: Tax liability generally applies when annual income exceeds the prescribed minimum threshold under the scheme.
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Lower Chances of Audit: Participants in the scheme are generally less likely to face audits unless there are unusual financial activities, unexplained banking transactions, or inconsistencies in declared income and assets.
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Simplified Record Keeping: Taxpayers are encouraged to maintain simple and organised records of sales, expenses, purchases, and business transactions for easier compliance.
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Withholding and Additional Taxes: Certain withholding tax obligations and standard tax rules may still apply where legally required under FBR regulations.
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Penalties for Non-Compliance: Failure to submit returns, concealment of income, or violation of scheme conditions may result in fines and legal action.
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No Mandatory POS or Digital Integration for Some Businesses: Certain small businesses under the scheme may not be required to install POS systems or advanced digital integration systems.
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Benefits of Being an Active Taxpayer: Registered and compliant taxpayers may enjoy advantages such as Active Taxpayer List (ATL) status, lower withholding taxes, and improved financial credibility.
Important Clarification: The scheme is intended to facilitate small businesses, improve documentation of the economy, and encourage voluntary tax compliance in Pakistan.
- Audit Selection Based on Risk: Under the FBR 2026 guidelines, audits are generally conducted only in unusual or high-risk cases. Ordinary taxpayers are typically not selected for audit.
15: Bank Transactions Must Match Income: The bank deposits and withdrawals should reasonably match declared income, business activities, and daily expenses.
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Unusual Banking Activity Can Trigger an Audit: If there is a large unexplained difference between the declared income and banking transactions, an audit may be initiated.
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Information from Other Sources is Cross-Checked: The FBR may compare declared income with data received from other institutions and government records.
18: Business and Lifestyle Should Match Declared Income: Property, business scale, assets, and lifestyle should be consistent with the income declared in taxpayers’ tax records.
19: Excess Assets or Spending May Raise Questions: If expenses, assets, or investments are significantly higher than declared income, it can become a reason for audit scrutiny.
20: Genuine Taxpayers Usually Do Not Need to Worry: Honest and compliant taxpayers generally do not need to fear audits if their records and declarations are accurate and transparent.
Copyright Business Recorder, 2026
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