In short
- Profit from your business is taxed on the business slabs, which are higher than the salaried slabs.
- Tax taken on your shop's electricity bill and other advance taxes is set against your final tax.
- Retailers are mainly Tier-1 for sales tax when turnover is above Rs 200 million.
Records worth keeping
- Daily or monthly sales totals and purchase invoices.
- Rent, salaries, utility bills and other business expenses.
- Stock at the end of the year and money owed to and by you.
Sales tax
- Tier-1 retailers must register for sales tax and connect their point of sale to the FBR.
- Manufacturers, importers and many wholesalers have their own registration rules.
- Accepting card payments alone no longer makes a small retailer Tier-1.
Example
Usman's shop makes a taxable profit of Rs 1,500,000
On the business slabs his tax is Rs 90,000 plus 20% of the Rs 300,000 above Rs 1.2 million: Rs 150,000 for the year. Tax already taken on his shop's electricity bills is deducted from that.
Common mistakes we fix
- Keeping no records and declaring a guessed profit.
- Mixing personal and business money in one bank account without notes.
- Ignoring an FBR notice about sales tax registration.
My shop is small. Do I need to file?
If your taxable income is above Rs 600,000 a year, yes. Filing also lowers the advance tax charged to you on many transactions.
Can I pay tax as a fixed amount instead?
Some special schemes for small retailers have been offered at times. We'll tell you whether one is open and suits you.
General guidance for Tax Year 2027, not advice on your specific case. Rules change with each Finance Act, so please speak to us before acting on it.