There is no new "simplified tax regime" or fixed tax scheme for small businesses in 2026. The closest thing FBR has had is the Tajir Dost Scheme, a fixed monthly tax for retailers that started in 2024. FBR overhauled it in November 2024, and reports say the IMF has agreed to its closure. For tax year 2026, most small businesses therefore pay income tax under the normal rules, on their actual profit. This guide explains what happened to the fixed tax idea, what "presumptive tax" actually means, and what a small business needs to do now.
Is there a new fixed tax regime for 2026?
No, as far as we can confirm. An earlier version of this page, and a related article on a "new presumptive tax 2026", described a regime that FBR was expected to introduce. Neither article could point to an actual FBR notification. The presumptive tax rates they showed were labelled "illustrative" and "not confirmed by official FBR sources". We have removed them.
If FBR does introduce a fixed or presumptive scheme for small businesses, it will be announced through the Finance Act or an FBR notification setting out who qualifies and what they pay. Until then, don't budget on the basis of a scheme that hasn't been announced.
What the Tajir Dost Scheme was
The Tajir Dost Scheme is the main recent example of a fixed tax for small traders. It's useful background, but you shouldn't plan around it.
- Who it targeted: retailers and wholesalers in 42 designated cities, including Karachi, Lahore, Islamabad, Rawalpindi, Peshawar and Quetta.
- How the tax was set: a fixed monthly amount based on the fair market valuation of the shop, taking account of its rental value and location, rather than the trader's actual profit.
- Amounts: the monthly tax ranged from Rs 100 to Rs 60,000, depending on the valuation.
- Timing: the scheme took effect from 1 July 2024, with the first payment due by 15 July 2024.
- Mandatory or voluntary: it was meant to make registration mandatory for eligible unregistered traders, but in practice it worked mostly as a voluntary compliance scheme.
What happened next: in November 2024, FBR significantly overhauled the scheme. It moved away from a fixed tax on small shops and towards targeting large retailers using data analytics. Reports also indicate that the IMF has agreed to the scheme's closure. Its original fixed-tax form is not a regime you can rely on for tax year 2026.
What "presumptive" or "final" tax means
You'll see these terms in articles about small business tax, so it helps to know what they mean:
- Presumptive tax is charged at a fixed rate on an easily measured figure, such as gross receipts, turnover or the value of a transaction, instead of on your actual profit.
- No expense deductions: because the tax is worked out on the gross amount, you don't deduct business expenses against income taxed this way.
- Often final: where presumptive tax is a final tax, no further income tax is due on that income once it's paid.
- You still file: paying a presumptive or fixed tax doesn't remove the need to register and file your annual return.
Pakistan's law does apply presumptive or final treatment to certain specific kinds of income and transactions. Whether any of your income falls into one of these categories depends on exactly what it is. That's a question for a tax adviser or the current FBR withholding tax card, not a general rule for all small businesses.
How a small business is taxed in tax year 2026
Tax year 2026 covers the fiscal year 2025-26, from 1 July 2025 to 30 June 2026. Unless a specific provision says otherwise, a small business pays income tax under the normal regime:
- Register. Get a National Tax Number (NTN) on the FBR IRIS portal. A sole proprietor registers as an individual; a partnership (AOP) or company registers as an entity.
- Work out profit. Taxable income is your business revenue minus allowable business expenses. Expenses must be incurred for the business and backed by records. See our guide to deductible business expenses.
- Apply the rates. Individuals and AOPs are taxed on progressive slabs, and companies at corporate rates. See the current tax slab tables.
- File your return on IRIS. Enter your gross receipts, expenses and net profit, declare tax already deducted from your payments, and complete your wealth statement. Our filing deadline guide covers the due date and the filing steps.
- Pay. If tax is due, generate a Payment Slip ID (PSID) and pay through a bank or online banking before you submit.
Sales tax is a separate obligation. If you're a retailer who meets the Tier-1 criteria, you also have to integrate your point-of-sale system with FBR; see our POS integration guide. If you sell online, the e-commerce tax guide covers the extra points for online sellers.
Fixed or presumptive tax vs the normal regime
| Fixed or presumptive tax (where it applies) | Normal regime | |
|---|---|---|
| Tax is based on | A fixed amount, or a rate applied to gross receipts or a transaction | Actual profit (income minus allowable expenses) |
| Business expenses | Not deducted against that income | Deductible if incurred for the business and documented |
| Tax changes with profit? | No, the tax is fixed whether you make a profit or a loss | Yes, it rises and falls with profit |
| Records | Proof of payments, registration and premises details | Full books: sales, purchases, invoices, bank statements |
| Annual return | Still required | Required |
Practical checklist for small businesses
- Don't wait for a new scheme. File for tax year 2026 under the rules that exist now.
- Get and keep your NTN active, and file every year so you stay on the Active Taxpayers List.
- Keep basic records even if your business is simple: sales, purchases, rent, utility bills, bank statements and every tax payment receipt.
- Use a separate bank account for the business, so income and expenses are easy to show.
- Check your sales tax position separately from income tax.
- Watch for official announcements. Check FBR's website for notifications, especially around the June budget, rather than relying on forecasts.
Frequently asked questions
Is the Tajir Dost Scheme still running?
Not in its original form. FBR overhauled it in November 2024, shifting its focus to large retailers, and reports indicate the IMF has agreed to its closure. Don't assume you can pay a fixed monthly amount instead of filing a normal return.
Can I pay a fixed tax instead of filing a return?
Not under any general scheme we could confirm for tax year 2026. Even where a presumptive or final tax applies to part of your income, you still have to file your annual return.
Should I wait for FBR's "new simplified regime" before filing?
No. No such regime has been confirmed. Waiting risks missing the filing deadline and losing your place on the Active Taxpayers List.
What records should a small business keep?
Keep proof of all tax payments, your registration documents, details of your business premises (rent agreement or ownership papers), sales and purchase records, bank statements and any FBR correspondence.
Where can I check official information?
Check the FBR website (fbr.gov.pk) for notifications and circulars, or consult a qualified tax adviser.
This is general information, and tax rules change often. Check FBR's current notifications or ask a tax adviser about your own case.