What does section 99B allow for small traders and shopkeepers after the Finance Act 2026?

Section 99B is a power, not a tax. It lets the Federal Board of Revenue set up a separate income tax arrangement for small traders and shopkeepers through a gazette notification. The Finance Act, 2026 widened what that notification can contain, which is why it has come back into discussion.

What does the law say?

Section 99B, headed “Special procedure for small traders and shopkeepers”, is printed inside the section 99 entry of the Income Tax Ordinance amended to 30 June 2026. It says that, notwithstanding anything contained in the Ordinance, the Board with the approval of the Minister-in-charge may, by notification in the official Gazette, prescribe special procedure for:

• scope,
• rate and payment of tax including fixed tax,
• filing of return,
• audit, and
• assessment,

“in respect of such small traders and shopkeepers, in such cities or territories, as may be specified therein.”

What did the Finance Act, 2026 change?

Before 1 July 2026, the power covered “scope and payment of tax, filing of return and assessment”. Clause (14) of section 5 of the Finance Act, 2026 substituted the words “and payment of tax, filing of return” with “, rate and payment of tax including fixed tax, filing of return, audit”.

Item	Before Finance Act, 2026	After Finance Act, 2026
Scope	Yes	Yes
Rate of tax	Not named	Named
Payment of tax	Yes	Yes
Fixed tax	Not named	Named
Filing of return	Yes	Yes
Audit	Not named	Named
Assessment	Yes	Yes

The footnotes also record that the section was inserted by the Finance Supplementary (Second Amendment) Act, 2019, and that the Finance Act, 2021 replaced “Federal Government” with “Board with the approval of the Minister-in-charge”.

What does section 99B not say?

The section contains no rate, no fixed amount, no turnover limit, no definition of “small trader” or “shopkeeper”, and no list of cities. All of these are left to the notification. No notification issued under section 99B is held in this corpus, so this page cannot state the rates, thresholds, audit terms or covered cities of any scheme.

Does section 99B change a shopkeeper’s sales tax duties?

Not on its own terms. Section 99B overrides “anything contained in this Ordinance”, which is the Income Tax Ordinance, 2001. Sales tax duties come from the Sales Tax Act, 1990:

• Section 14(1)(b) of the Sales Tax Act requires registration by “a retailer who is liable to pay sales tax under the Act or rules made thereunder”, excluding a retailer required to pay sales tax through the electricity bill under section 3(9).
• Section 3(9) charges retailers other than Tier-1 retailers through their monthly electricity bills.

A section 99B notification, being made under the Income Tax Ordinance, is not shown in the corpus as a source of power to alter those provisions.

How is the scheme enforced?

Two provisions of the Income Tax Ordinance refer to section 99B directly.

1. Sealing. Serial 3A of the Table in section 182(1), inserted by the Finance Act, 2024, covers a trader or shopkeeper “who is required to apply for registration under this Ordinance but fails to register or fails to pay advance tax as specified in a scheme of special procedure prescribed under section 99B”. The shop shall be sealed for seven days for the first default and twenty one days for each subsequent default.
2. Prosecution. Section 191B says any person specified in section 99B who is required to apply for registration but fails to do so commits an offence punishable on conviction with imprisonment for a term not exceeding six months, or fine, or both.

Worked example (illustrative scenario)

Tariq sells shoes from a small shop in Peshawar and hears that a fixed income tax scheme for traders has been notified.

1. Is he covered? Only if the notification names Peshawar and describes traders like him. He needs the notification text.
2. How much? Whatever rate or fixed tax the notification sets. The Ordinance gives no figure.
3. Can he be audited under the scheme? Since the Finance Act, 2026 the notification may prescribe audit. Whether it does depends on its text.
4. Does paying the scheme settle his sales tax? Section 99B gives no basis for that. His sales tax position is decided under sections 3 and 14 of the Sales Tax Act.
5. What if he is covered and does not register or pay? Sealing under serial 3A of section 182, and possible prosecution under section 191B for failing to register.

Common mistakes

• Quoting a scheme figure as “the section 99B rate”. The section contains no rate. Any figure comes from a notification.
• Reading older commentary. Material written before July 2026 describes a narrower power without rate, fixed tax or audit.
• Treating the scheme as covering all taxes. It is an income tax procedure. Sales tax registration and payment remain under the Sales Tax Act.
• Confusing 99A and 99B. Section 99A is about tax through commercial electricity connections set by an income tax general order. Section 99B is about a special procedure for small traders and shopkeepers set by gazette notification.

What to check in the official text

Read section 99B as printed in the section 99 entry of the Income Tax Ordinance as amended to 30 June 2026, serial 3A of the Table in section 182(1), and section 191B. Clause (14) of section 5 of the Finance Act, 2026 shows the latest change. For sales tax, read sections 3(9) and 14 of the Sales Tax Act, 1990 as amended to 30 June 2026. The gazette notification that sets up any scheme is not held in this corpus and needs to be read on its own.