FBR Simplified Tax Scheme for Small Shopkeepers (SRO 1166): Digital Invoicing Exemption Explained
FBR's SRO 1166 voluntary 1% fixed-tax regime lets small shopkeepers skip POS and mandatory digital invoicing. Who qualifies, what it costs, who is excluded, and when you still need FBR Digital Invoicing.
What SRO 1166 introduced
In July 2026 FBR notified a simplified, voluntary income tax regime for small shopkeepers through Income Tax SRO 1166. Instead of filing under the normal regime, an eligible individual retailer can opt to pay income tax equal to 1% of gross turnover, with a minimum cash tax of Rs 25,000 for the year even if tax already deducted at source exceeds that.
The headline relief for many small traders is the compliance carve-out: participants are exempt from routine audit, from deducting withholding tax on purchases, from the 1.5% minimum turnover tax, and — most relevant here — from the mandatory Point-of-Sale (POS) and digital invoicing integration requirements.
Who can opt in
The scheme targets genuinely small, single-shop individual retailers with annual turnover up to Rs 200 million. Participation is voluntary and registration is available through FBR's IRIS portal, the FBR mobile application, and authorised tax practitioners or facilitators.
Even inside the scheme, shopkeepers must keep accurate records of sales, purchases and expenses. The exemption is from the heavier integration machinery, not from basic record-keeping.
Who is excluded (and still faces integration)
The scheme deliberately excludes several groups: retailers whose turnover exceeded Rs 200 million in any of the preceding three years, owners of more than one shop, Tier-1 retailers, jewellers, and professionals such as doctors, engineers and lawyers.
If you fall in an excluded group, or your category has been separately notified for e-invoicing under the goods SROs (SRO 709(I)/2025, SRO 1852(I)/2025) or draft SRO 288(I)/2026 for services, the digital-invoicing obligation still applies to you and the fixed-tax exemption does not cover it.
When you still need FBR Digital Invoicing
The SRO 1166 exemption is an income-tax relief for small shopkeepers; it does not change the sales tax law. A sales tax registered person whose category is notified must still issue invoices through FBR Digital Invoicing, with an Invoice Reference Number (IRN) and QR code, to keep input-tax eligibility for their registered buyers.
In practice: if you are a tiny retailer selling to walk-in consumers and you opt into the fixed scheme, you may be outside mandatory digital invoicing for now. If you sell B2B to registered buyers, are a Tier-1 retailer, or your sector is notified, you will still need a compliant platform.
How Digi Invoice fits
Many businesses sit on the boundary — partly eligible for simplification, partly still obliged to issue verifiable invoices. Digi Invoice lets you stay ready either way: when digital invoicing does apply to a sale, it posts the invoice to FBR, validates it against the DI v1.12 rules, and returns the IRN and QR without any developer work.
Because deadlines and scheme rules keep changing, always confirm your exact obligation for your category on the FBR portal (iris.fbr.gov.pk) before relying on any exemption.