What is the section 99B special procedure for small traders and shopkeepers?

Section 99B is an enabling power. It does not itself tax anyone. It lets the Federal Board of Revenue build a separate income tax scheme for small traders and shopkeepers through a notification in the official Gazette, and the details that matter to a shopkeeper (who is covered, how much is paid, how returns work) live in that notification.

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 else 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 the notification specifies.

The footnotes record its history. The section was inserted by the Finance Supplementary (Second Amendment) Act, 2019. The Finance Act, 2021 replaced “Federal Government” with “Board with the approval of the Minister-in-charge”. The Finance Act, 2026 then widened the list: before it, the power covered only “scope and payment of tax, filing of return and assessment”. Clause (14) of section 5 of the Finance Act, 2026 added rate, fixed tax and audit.

How does it work in practice?

Three things follow from the text.

1. Coverage is set by the notification. The section speaks of “such small traders and shopkeepers” in “such cities or territories” as the notification specifies. The Ordinance does not define “small trader” or “shopkeeper” for this section, and it sets no turnover limit, shop size or city list. Those are for the notification.
2. The amount is set by the notification. Since the Finance Act, 2026, the notification may set a rate or a fixed tax. The Ordinance itself contains no figure for a 99B scheme.
3. The notification overrides the rest of the Ordinance for those it covers. The section opens with “Notwithstanding anything contained in this Ordinance”, so the scheme’s rules on returns, audit and assessment can differ from the normal ones.

The notification or notifications issued under section 99B are not part of the corpus held on this site. This page therefore cannot say which cities are covered, what the fixed or minimum amount is, or what turnover limit applies.

How is section 99B different from section 99C?

Section 99C is a parallel power. It lets the Board, with the Minister-in-charge’s approval, prescribe special procedure for “small businesses, construction businesses, medical practitioners, hospitals, educational institutions and any other sector” the Board specifies. Section 99C covers scope and payment of tax, record keeping, filing of return and assessment. Unlike section 99B after the Finance Act, 2026, section 99C does not expressly mention rate, fixed tax or audit.

Section 99A is different again: it concerns tax collected through commercial electricity connections of retailers other than Tier-1 retailers, under an income tax general order.

What happens if a shopkeeper ignores the scheme?

Section 182 gives the scheme teeth. Serial 3A of the Table in section 182(1), inserted by the Finance Act, 2024, applies where a trader or shopkeeper who is required to apply for registration fails to register or fails to pay advance tax “as specified in a scheme of special procedure prescribed under section 99B”. The penalty is that the shop shall be sealed for seven days for the first default and twenty one days for each subsequent default.

Worked example (illustrative scenario)

Naveed sells mobile accessories from a small shop in Hall Road, Lahore. He hears that a traders’ scheme has been announced.

1. Does section 99B itself tax him? No. It only empowers the Board.
2. Is he covered? That depends on whether the notification names Lahore, and on how it describes the traders it covers. He needs the notification text.
3. How much does he pay? Whatever rate or fixed tax the notification prescribes. Nothing in the Ordinance fixes the figure.
4. What if he is covered and does not register or pay the advance tax the scheme requires? Section 182, serial 3A: seven days of sealing for the first default, twenty one days for each later default.

Common mistakes

• Quoting a scheme rate as “section 99B tax”. Section 99B contains no rate. Any figure comes from a notification, which can change without the Ordinance changing.
• Assuming every shopkeeper is covered. The scheme covers only the traders and cities the notification specifies.
• Relying on the pre-2026 wording. Before 1 July 2026 the section did not mention rate, fixed tax or audit. Commentary written earlier may describe a narrower power.
• Confusing 99A, 99B and 99C. Section 99A is about electricity-bill collection, 99B about small traders and shopkeepers, and 99C about small businesses and listed sectors.

What to check in the official text

Read section 99B and section 99C as printed in the section 99 area of the Income Tax Ordinance amended to 30 June 2026, and serial 3A of the Table in section 182. Clause (14) of section 5 of the Finance Act, 2026 shows the latest change to section 99B. The gazette notification that sets up any scheme, with its cities, coverage, rates and dates, is not held in this corpus and needs to be read on its own.