Mohsin Siddiqui (Chief Reporter)
The Federal Board of Revenue (FBR) has made significant progress under its Tajir Dost Scheme, registering over 58,000 small traders and new shopkeepers against an ambitious target of 3.2 million. This initiative is a part of the government’s broader efforts to expand the tax net and enhance revenue collection. With monthly tax payments set to begin this August, the FBR is projected to collect Rs50 billion in the current fiscal year.
The Tajir Dost Scheme, designed to bring small traders and shopkeepers into the formal tax system, has seen the registration of 58,000 traders so far. However, this figure falls short of the target of 3.2 million, indicating the challenges the FBR faces in achieving widespread compliance. The Chief Coordinator of the Tajir Dost Scheme, Naeem Mir, acknowledged that while the target is ambitious, achieving it will require the full cooperation of traders across the country.
Mir emphasized the importance of traders voluntarily paying their monthly tax installments, as this will be crucial to meeting the revenue targets set for the year. The success of the scheme hinges not only on registration but also on ensuring that traders adhere to the payment schedule, which is integral to the government’s broader economic strategy.
The FBR has developed a detailed structure for the monthly advance income tax payments under the Tajir Dost Scheme, covering 42 cities across Pakistan. These cities include major urban centers such as Karachi, Lahore, Islamabad, and Faisalabad, as well as smaller cities like Gwadar, Haripur, and Mirpurkhas. The tax rates are determined based on the location of shops, with the FBR issuing market and area-specific income tax tables.
Under the monthly tax payment plan, the majority of traders—78 percent—will be required to pay a monthly advance income tax of Rs5,000. In 14 percent of markets, traders will pay Rs10,000 per month, while in 5 percent of areas, the monthly tax will be Rs20,000. In more affluent or commercially active areas, 2 percent of traders will pay Rs30,000 per month, and 0.6 percent of traders will be liable for Rs45,000 monthly. The highest bracket, covering 0.40 percent of markets, will see traders paying Rs60,000 per month.
This tiered structure is designed to ensure that the tax burden is distributed according to the economic activity and profitability of different markets, thereby making the tax system more equitable.
Despite the progress made so far, the FBR remains focused on maximizing the registration of small traders and shopkeepers under the Tajir Dost Scheme. According to Naeem Mir, a simplified income tax return form in Urdu is expected to be issued during the current week to facilitate compliance. This move is intended to make it easier for traders to understand and fulfill their tax obligations, thereby encouraging more registrations.
The FBR has also initiated an enforcement drive, issuing notices to traders who have yet to register or make their tax payments. However, Mir pointed out that the issue of non-compliance can only be effectively addressed through a comprehensive awareness campaign at the national level. Educating traders about the benefits of formal registration and the long-term advantages of being part of the formal economy is essential for the success of the scheme.
To encourage timely tax payments, the FBR has introduced several incentives under the Tajir Dost Scheme. One of the key incentives is a 25 percent discount for traders who opt to pay their annual tax liability in one lump sum. This discount is expected to motivate traders to fulfill their tax obligations early, thereby improving the FBR’s cash flow and reducing the administrative burden of collecting monthly installments.
Traders who believe that their monthly tax rates are set too high have the option to visit their Regional Tax Offices (RTOs) to request a correction. However, Mir advised traders to ensure that they receive signed and stamped copies from the relevant RTO when submitting objections to avoid any future disputes.
The Finance Bill 2024 has introduced stringent penalties for non-compliance with the Tajir Dost Scheme. Traders and shopkeepers who fail to register under the scheme risk having their shops sealed. Additionally, failure to register has been made an offense punishable by imprisonment for up to six months, a fine, or both. These penalties underscore the government’s determination to expand the tax net and ensure that all eligible traders contribute to the national exchequer.
