Pakistan’s Federal Board of Revenue (FBR) on Wednesday proposed a fixed tax scheme for small traders and shopkeepers, under which a 1% tax would be charged on annual sales turnover.

The scheme would apply to shopkeepers with a single shop and annual turnover of up to Rs200 million, the FBR said in a notification.

The government expects the scheme to generate more than Rs50 billion in annual revenue, it said.

The scheme is voluntary, allowing small shopkeepers to opt in or file regular income tax returns. Participants would have to pay a minimum annual cash tax of Rs25,000.

Shopkeepers with more than one shop, large retailers classified as Tier One, jewellers and people providing professional services would not be eligible.

The FBR has invited objections and suggestions from the public and traders on the draft within seven days.

Traders would be able to register through the FBR’s IRIS portal, mobile application or their nearest tax office.

Eligible shopkeepers would be issued a green plate under the scheme. FBR officers would not enter shops displaying the plate for tax-related matters, the notification said.

Shopkeepers joining the scheme would also be exempt from installing point-of-sale machines and from tax audits.

However, they would have to provide details of net profit, income from other sources and total tax paid. Details of immovable property, bank balances, cash and other assets would also be required.

The FBR has introduced a one-page tax return form requiring the shopkeeper’s name, address, national identity card number and nature of business, along with annual sales, purchases and business expenses.

The FBR said an audit would be conducted if business activity appeared insignificant compared with the purchase of substantial assets.

Strict action would be taken against those misusing the scheme or concealing information to evade taxes, the FBR said, adding that it had full authority to process information received from third parties.

Registration

Shopkeepers would need the shop owner’s CNIC number, a mobile number registered in their name, a working email address and business premises details, including the address and electricity bill consumer number.

They would also need basic business details such as shop size and annual sales turnover.

Applicants not already registered with the FBR would first obtain a National Tax Number through the FBR portal using their CNIC.

They would then log in to the IRIS portal or the Tax Asan app and select the Fixed Tax Scheme or Trader-Friendly Module.

The one-page registration form would be available in Urdu, English, Sindhi, Balochi and Pashto, and would require details of shop size, business nature and annual gross sales.

Under the scheme, a 1% tax would apply to annual sales, with a minimum cash tax payment of Rs25,000 required for registration.

After approval, the FBR would issue a green registration plate with a unique QR code, which would have to be placed prominently outside or in front of the shop.