The federal government and trader bodies are moving closer to a consensus on a simplified fixed tax scheme for retailers, aimed at small businesses with annual turnover up to ₨200 million. The proposal is expected to be included in the Finance Bill 2026-27 as authorities seek to widen the tax base while reducing compliance pressure on small-scale retail sectors.
Under the proposed framework, retailers earning up to ₨200 million annually would pay a fixed 1 percent turnover tax, with a minimum payment requirement of ₨25,000. The scheme is designed to simplify tax collection and improve documentation while offering predictable tax obligations for small and medium-sized businesses across the country.
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Furthermore, officials said the scheme has been discussed with small traders and their representative organisations ahead of the upcoming federal budget scheduled for presentation in parliament on June 5, 2026. The consultations aim to address concerns from the business community while finalising a balanced taxation model for retail sector participation.
In addition, authorities stated that retailers opting for the fixed tax scheme would generally be exempt from routine audits unless the Federal Board of Revenue identifies major inconsistencies in declared income or asset details. This provision is intended to reduce administrative burden while maintaining safeguards against tax evasion.
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Moreover, the Federal Board of Revenue (Federal Board of Revenue) will issue QR code-based certificates to registered retailers under the new system, enabling easier verification and digital compliance tracking. Officials also warned that businesses choosing to remain outside both the normal tax system and the proposed scheme may face penalties under upcoming legal amendments.
Finally, sources indicated that the government is expected to formally announce the new retailer taxation framework after Eid al-Azha. Policymakers believe the scheme could improve documentation of the retail economy while ensuring broader participation in the tax net without placing excessive burden on small shopkeepers.