Summary FBR plans a simplified voluntary tax scheme for small traders under Budget 2026–27, aiming to widen the tax base and ease compliance through incentives and reduced audits.
KARACHI (Web Desk) – The Federal Board of Revenue (FBR) has prepared a new simplified tax scheme for shopkeepers and small traders, which is expected to be formally announced in the Federal Budget 2026–27.
According to official sources, consultations with various stakeholders are currently underway to finalise the proposed framework. The scheme is designed to bring greater ease and compliance into the tax system while encouraging voluntary participation from small businesses.
Under the proposed plan, traders with an annual business turnover of up to Rs20 million will be eligible to join the scheme. Individuals who have been running their business for at least three years will also be allowed to apply. Registration will be facilitated through the IRIS portal, mobile applications, or authorised tax facilitation centres.
Participation in the scheme will be voluntary; however, maintaining accurate financial records will be mandatory for all enrolled taxpayers. Authorities are also considering a relatively lower and simplified tax rate for eligible traders, with tax liability applying only on income exceeding a defined threshold.
One of the key features of the scheme is reduced scrutiny, as participants are expected to be generally exempt from routine audits. However, audits may still be conducted in cases involving unusual financial activity or discrepancies in reported income.
Small traders will be required to maintain basic records of sales, purchases, and expenses. In addition, certain small businesses may be exempted from point-of-sale (POS) integration and full digital reporting requirements, easing compliance burdens.
The scheme is also expected to offer incentives for active taxpayers, including inclusion in the Active Taxpayers List (ATL), reduced withholding tax rates, and improved financial credibility in the banking sector. At the same time, strict penalties will apply in cases of non-compliance, income concealment, or failure to file returns.
Officials said the broader objective of the initiative is to expand the tax base, promote documentation of the economy, and encourage voluntary tax compliance. Financial transactions and declared income will need to remain consistent to avoid regulatory action.
The move is being seen as part of the government’s wider efforts to integrate small traders into the formal economy while balancing enforcement with facilitation.
