IMF conditions: FBR launches 'Tajir Dost Scheme' in six cities

ISLAMABAD: In a bid to comply with the demand of the IMF, the Federal Board of Revenue (FBR) has announced the initiation of tax collection under the newly proposed ‘Tajir Dost Scheme’ for small traders and shopkeepers.

The scheme was launched in six major cities including Islamabad, Rawalpindi, Karachi, Lahore, Quetta, and Peshawar.

Under the Tajir Dost Scheme, monthly advance tax payments will kick off on July 1, 2024, with the first payment due on July 15, 2024.

Subsequent payments will be due on the 15th of each following month, facilitating convenient payments through a dedicated computerized system using a Payment Slip ID (PSID) generated by the Tajir Dost module or the FBR’s online portal a private news channel reported.

Traders and shopkeepers participating in the scheme will be required to make monthly advance tax payments, serving as a minimum tax on income derived from covered businesses.

The FBR will specify the calculation method for monthly advance tax, aiming to provide a simplified tax regime to encourage compliance and bolster the country’s economic development.

Introduced under SRO 420(I)/2024 and leveraging Section 99B of the Income Tax Ordinance, 2001, the Tajir Dost Scheme aims to support traders and shopkeepers operating through fixed locations like shops, stores, warehouses, and offices within specified territorial limits. However, the scheme excludes companies or units of national or international chain stores with operations spanning multiple cities, as determined by the FBR.

Scheduled for implementation from July 1, 2024, all eligible traders and shopkeepers are mandated to register under Section 181 of the Income Tax Ordinance, 2001 by April 30, 2024. Registration can be completed online through designated platforms like the Tax Asaan app or the FBR portal, or in person at FBR’s Tax Facilitation Centers.

Non-compliant individuals may be registered by the Commissioner of Inland Revenue as per Section 182 of the Ordinance, with penalties applicable to non-compliant traders or shopkeepers. For those with zero computed advance tax, a minimum annual advance tax of Rs 1,200 applies, excluding income exempted under any provision of the Ordinance.

Moreover, the scheme offers a 25 percent reduction in advance tax payable if the entire remaining advance tax for the relevant tax year is paid in a lump sum before the due date, or if income tax returns for the tax year 2023 are filed before the due date for the first monthly installment.

This initiative reflects the FBR’s commitment to fostering a conducive environment for small businesses, promoting compliance, and driving economic growth across the nation.