The Federal Board of Revenue (FBR) in Pakistan is making a concerted effort to bring more small businesses into the formal economy through its newly launched Tajir Dost Scheme. More than 17,000 traders have already registered, demonstrating a promising initial response.
Targeting the Informal Sector:
Pakistan’s economy, like many developing nations, has a significant informal sector. Many small businesses operate outside the formal tax net, hindering government revenue collection and hindering economic transparency. The Tajir Dost Scheme specifically targets small shopkeepers and traders in six major Pakistani cities: Karachi, Lahore, Islamabad, Rawalpindi, Peshawar, and Quetta.
Simplified Registration Process:
One of the key advantages of the Tajir Dost Scheme is its focus on ease of registration. Previously, registering for taxes could be a complex and time-consuming process. The scheme leverages technology and readily available resources to streamline registration. Shopkeepers can register themselves through the user-friendly FBR’s Tax Asaan app, the FBR’s online portal, or by visiting designated Tax Facilitation Centers.
Benefits of Registration:
By registering under the Tajir Dost Scheme, small businesses gain access to a National Tax Number Certificate. This certificate is crucial for operating formally and potentially opens doors to future business opportunities and access to credit facilities. Additionally, integrating these businesses into the formal tax system allows the government to better understand and track economic activity within the country.
Advance Tax Payments:
The Tajir Dost Scheme introduces the concept of “Tajir Dost (Special) Procedure, 2024.” Starting from July 1, 2024, small traders registered under the scheme will be required to make minimal monthly advance tax payments. These payments are designed to be hassle-free, processed electronically through a Computerized Payment Receipt using a Payment Slip ID (PSID). This ensures proper documentation and simplifies the tax payment process for both businesses and the tax authorities.
Legal Framework:
The legal foundation for the Tajir Dost Scheme is established in SRO 457(I) 2024, issued by the FBR. This document outlines the specific compliance requirements and the categories of businesses covered by the scheme. It builds upon the initial announcement made in Notification S.R.O. No. 420(l) 2024 on March 21, 2024.
Broad Definition of “Shopkeeper”:
The Tajir Dost Scheme takes a comprehensive approach by defining “shopkeeper” in a broad sense. This encompasses a wide range of business activities conducted at fixed locations within the designated cities. Examples include wholesale and retail trade, manufacturing units, and even import businesses. This broad definition encourages a diverse range of small businesses to formalize their operations, ultimately contributing to a wider tax base and increased government revenue.
Looking Ahead:
The Tajir Dost Scheme represents a significant step towards formalizing Pakistan’s economy and fostering greater tax compliance among small businesses. By simplifying registration, offering benefits of formalization, and implementing a manageable advance tax payment system, the scheme has the potential to significantly improve tax collection and economic transparency in Pakistan. The continued success of the program will depend on effective communication with target businesses, ongoing support for registration, and ensuring a user-friendly tax payment process.
