FBR bars inland revenue officers from entering registered small shops under new tax scheme

Pakistan’s Federal Board of Revenue (FBR) has introduced a new tax compliance framework for small retailers, under which Inland Revenue officers will no longer be permitted to enter registered small shops for routine tax-related matters. The initiative is aimed at simplifying tax compliance for small businesses while reducing direct interaction between taxpayers and tax officials.

According to a notification issued by the Revenue Division, eligible shopkeepers will be required to file a simplified annual tax return through the IRIS web portal or the official mobile application. The simplified filing system is designed to make tax registration and compliance easier for small business owners who may not have access to professional accounting services.

The notification states that the tax return must include basic financial information, such as the value of purchases and sales, business expenses, and annual profits. In addition, retailers will be given the opportunity to declare their legitimate business assets through the simplified return process, providing greater transparency while keeping documentation requirements relatively straightforward.

Under the new scheme, registered shopkeepers will pay a tax equal to one percent of their total annual business turnover. The policy also allows retailers to adjust any withholding income tax already deducted against their total tax liability, helping to avoid double taxation and ensuring that previously paid taxes are taken into account.

One of the most significant features of the new policy is the introduction of a green identification plate for registered businesses. Every retailer participating in the scheme will receive a green plate that must be displayed prominently outside the shop.

The green plate will serve as proof that the business is registered under the simplified tax regime. According to the notification, Inland Revenue officers will not be allowed to enter shops displaying the green plate for tax-related inspections or routine tax matter, providing registered businesses with greater certainty and reducing concerns about unnecessary visits by tax officials.

Each green plate will contain a unique QR code, the name of the shopkeeper, the business’s National Tax Number (NTN), and the shop’s registered address. The QR code will enable authorities to verify a retailer’s registration electronically, reducing paperwork and making compliance easier for both taxpayers and tax administrators.

The scheme applies to businesses with an annual turnover of up to PKR 200 million for the 2026 tax year. By targeting small and medium-sized retailers, the government aims to expand the tax base while introducing a more business-friendly system that encourages voluntary compliance.

However, the policy does not apply to all retailers. According to the notification, Tier-1 retailers, which are generally larger businesses subject to stricter tax regulations, are excluded from the scheme. Likewise, jewelry retailers will not be eligible to participate and will continue to operate under the existing tax framework.

The Revenue Division has formally implemented the policy through SRO 1109 of 2026, providing the legal basis for the new tax arrangement.

The initiative represents part of the government’s broader efforts to modernize Pakistan’s tax administration by using digital platforms, simplifying tax procedures, and reducing direct contact between taxpayers and revenue officials. Authorities hope the new framework will encourage more small businesses to register with the tax system while improving transparency, increasing compliance, and creating a more predictable environment for retailers across the country