Under FBR's small shopkeepers tax scheme a shop pays 1% of its gross sales for the year as income tax, and at least Rs 25,000 of it must be paid in cash with the return. A shop that sold Rs 60 lakh in tax year 2026 owes Rs 60,000. If Rs 12,000 was already deducted as advance tax on its electricity bill, Rs 48,000 is left to pay with the return.
Enter the shop's sales for 1 July 2025 to 30 June 2026 and the withholding tax already taken from you. The calculator applies the cash minimum, shows withholding tax that will not come back, checks the conditions for joining, and, if you add your net profit, compares the scheme with a normal return. Last date for the return: 31 October 2026.
Tax under the scheme at different sales
Tax for the year under the scheme, and the cash due with the return with no withholding and with Rs 20,000 already withheld:
| Yearly sales | 1% tax | Cash with return, no withholding | Cash with return, Rs 20,000 withheld | Per month |
|---|---|---|---|---|
| Rs 1,000,000 | Rs 10,000 | Rs 25,000 | Rs 25,000 | Rs 2,083 |
| Rs 2,500,000 | Rs 25,000 | Rs 25,000 | Rs 25,000 | Rs 2,083 |
| Rs 5,000,000 | Rs 50,000 | Rs 50,000 | Rs 30,000 | Rs 4,167 |
| Rs 10,000,000 | Rs 100,000 | Rs 100,000 | Rs 80,000 | Rs 8,333 |
| Rs 25,000,000 | Rs 250,000 | Rs 250,000 | Rs 230,000 | Rs 20,833 |
| Rs 50,000,000 | Rs 500,000 | Rs 500,000 | Rs 480,000 | Rs 41,667 |
| Rs 100,000,000 | Rs 1,000,000 | Rs 1,000,000 | Rs 980,000 | Rs 83,333 |
| Rs 200,000,000 | Rs 2,000,000 | Rs 2,000,000 | Rs 1,980,000 | Rs 166,667 |
On small sales the cash minimum decides the bill. Above it, every Rs 10 lakh of sales adds Rs 10,000 of tax.
Who can join the scheme
The special procedure is for individuals who earn mainly from a retail shop, with yearly sales of up to Rs 200 million (Rs 20 crore). It covers tax year 2026 only and only the income from the shop; rent, salary or other income goes in the normal way.
These shopkeepers cannot use it:
- anyone whose sales were above Rs 200 million in any of the last three years
- anyone who owns more than one shop
- Tier-1 retailers
- jewellery sellers
- professionals such as doctors, engineers and lawyers
A shopkeeper who filed a return for tax year 2025 may join only if the tax under the scheme is not lower than the tax for 2025, and only if the business has not been split up or renamed to fit the scheme. The scheme is optional: you can file a normal return instead.
How the 1% tax is worked out
- Take the shop's gross sales for the year, before any expenses.
- Tax is 1% of that figure.
- Take off the income tax already withheld from you during the year, such as advance tax on the shop's electricity bill.
- What is left is paid in cash with the return, but never less than Rs 25,000.
- If the withholding is more than the 1% tax, the extra is not refunded.
Worked example: a small general store
A general store sold Rs 15 lakh in the year and had Rs 4,000 deducted on its electricity bills. The 1% tax is Rs 15,000. After the withholding, Rs 11,000 would be left, but the scheme needs at least Rs 25,000 in cash, so the shopkeeper pays Rs 25,000 with the return. Total tax for the year: Rs 29,000, or 1.93% of sales.
Worked example: a busy grocery shop
A grocery shop sold Rs 3 crore and had Rs 60,000 withheld. Tax is Rs 300,000; after the withholding it pays Rs 240,000 with the return, about Rs 20,000 a month over the year.
Scheme or normal return?
For a shop with Rs 1 crore of sales, tax under a normal return depends on profit. Normal return tax uses the 2025-26 business slabs for individuals:
| Profit margin | Net profit | Normal return | Scheme |
|---|---|---|---|
| 5% | Rs 500,000 | Rs 0 | Rs 100,000 |
| 10% | Rs 1,000,000 | Rs 60,000 | Rs 100,000 |
| 15% | Rs 1,500,000 | Rs 150,000 | Rs 100,000 |
| 20% | Rs 2,000,000 | Rs 290,000 | Rs 100,000 |
| 30% | Rs 3,000,000 | Rs 590,000 | Rs 100,000 |
With a thin margin a normal return can cost less; at higher margins the scheme wins. The scheme also brings no routine audit, no point of sale or digital invoicing, and no duty to withhold tax on purchases. A normal return needs proper accounts of sales and expenses. Work out the normal figure with the business income tax calculator, and check the advance tax taken on your bills with the withholding tax calculator.
Deadline, penalties and the Green Plate
The return for tax year 2026 was due on 30 September 2026, and FBR moved the last date to 31 October 2026. A shopkeeper who files neither a normal return nor the scheme return by then faces penalties of Rs 10,000 on the first default, Rs 25,000 on the second and Rs 50,000 on the third, at least a month apart.
Register through IRIS, the FBR shopkeepers' mobile app or the nearest tax office. The one-page return asks for sales, purchases, expenses, net profit and assets, and is available in Urdu and regional languages. Shopkeepers in the scheme receive a Green Plate with a QR code, their name, NTN and shop address, to be shown outside the shop.
The scheme in S.R.O. 1166(I)/2026 applies to tax year 2026 (1 July 2025 to 30 June 2026). Check the amount on your IRIS payment slip before you pay.
Small shopkeepers scheme questions
What is the FBR small shopkeepers tax scheme?
It is a special procedure FBR notified on 27 July 2026 under section 99B of the Income Tax Ordinance. A shopkeeper with one retail shop and yearly sales of up to Rs 200 million pays 1% of gross sales as income tax for tax year 2026, with at least Rs 25,000 paid in cash, and files a one-page return instead of a full one.
How much tax does a small shopkeeper pay?
1% of the year's sales, less withholding tax already deducted, with a cash minimum of Rs 25,000. Sales of Rs 50 lakh mean Rs 50,000 of tax; sales of Rs 1 crore mean Rs 100,000. Spread over twelve months, Rs 1 crore of sales works out to Rs 8,333 a month.
Is the Rs 25,000 minimum on top of the 1% tax?
No. You pay whichever is higher: the 1% tax less withholding, or Rs 25,000. A shop with Rs 40 lakh of sales and no withholding pays Rs 40,000, while one with Rs 20 lakh of sales pays the minimum Rs 25,000 in cash.
Will I get a refund of withholding tax under the scheme?
No. Withholding tax counts towards the 1% tax, but anything above it is not refunded, and the cash minimum is still due. A shop with Rs 15 lakh of sales and Rs 20,000 withheld pays Rs 25,000 in cash, and Rs 5,000 of its withholding goes unused.
Can a jeweller or a shop with two branches join the scheme?
No. The scheme excludes jewellery sellers, owners of more than one shop, Tier-1 retailers and professionals such as doctors, engineers and lawyers. It also excludes anyone whose sales passed Rs 200 million in any of the last three years. They file a normal return.
What happens if a shopkeeper does not file?
If you file neither a normal return nor the scheme return by 31 October 2026, the penalties are Rs 10,000 for the first default, Rs 25,000 for the second and Rs 50,000 for the third, with at least a month between each.
Last reviewed 19 October 2026. Results are estimates; official notices always take precedence.