The Federal Government has launched a mobile application for the fixed tax scheme aimed at bringing small traders and shopkeepers into the tax net, with the Retailer Scheme app unveiled on 19 August 2026 at the FBR in Islamabad by Finance Minister Muhammad Aurangzeb and Minister of State for Finance Bilal Azhar Kayani.
This represents the operational commencement of a policy announced in June and formally notified in July, and practising accountants now face immediate advisory and compliance obligations.
Scope and Eligibility
The app facilitates easy registration and tax return filing for retailers with an annual turnover of up to two hundred million rupees.
The scheme applies only to income earned from retail shops and excludes retailers whose annual turnover exceeded Rs 200 million in any of the previous three tax years, owners of more than one shop, Tier I retailers, jewellery sellers, and professionals such as doctors, engineers, and lawyers.
Tax Rate and Withholding Relief
Under the newly announced mechanism, shopkeepers and small traders with annual sales of up to Rs20 million will be subject to a fixed income tax rate of one percent.
Shopkeepers opting for this special procedure shall not be required to withhold tax on purchases of goods or services under Section 153 of the Income Tax Ordinance. This exemption reduces administrative friction for many sole proprietors whose cash-flow constraints often impede routine compliance.
Voluntary and Optional Character
The tax scheme for small shopkeepers has been made simple and optional, with small retailers able to remain in the regular tax regime instead of this scheme.
The procedure remains optional, and a shopkeeper may either pay tax under this procedure or file a regular income tax return. This flexibility is critical: accountants must assess each client's comparative tax position before advising enrolment, particularly where prior-year profitability or asset holdings trigger higher liabilities under the alternative regime.
Registration Routes
Shopkeepers may register with the FBR through the IRIS web portal, the Shopkeepers' Mobile Application, or by visiting the nearest tax office for assistance with registration.
Traders joining the scheme will receive a special identification plate from the Federal Board of Revenue displaying the shop's name, National Tax Number (NTN) and other tax-related information.
Implications for Accountants
The app launch operationalises a scheme that, since July, has required passive awareness but now demands active engagement. Firms advising retail clients—particularly those with turnovers between Rs20 million and Rs200 million—must review client files to identify eligibility and model the fixed 1% income tax exposure against standing liabilities. Those with significant other income (rent, dividends, capital gains) or prior-year assessments close to or below the fixed amount should be counselled to remain in the regular regime. Additionally, the Finance Minister assured shopkeepers that they would face no issues or harassment under the scheme, a statement that underscores the government's intent to position this as a low-friction entry point and may reduce perceived audit risk, though accountants should not advise clients that audit immunity is guaranteed.
Form and filing documentation are still being refined; practitioners should monitor FBR circulars for procedural rules governing amended returns and the treatment of losses under the scheme.