New Advance Tax Rules for Small Businesses under Tajir Dost Rule

Part II of S.R.O. 420(I)/2024 outlines the new framework for advance tax payments under the “Tajir Dost Scheme” for small businesses in Pakistan. Here’s a breakdown of the key points:

Who Needs to Pay Advance Tax?

All businesses registered under the Tajir Dost scheme are liable to pay monthly advance tax, effective July 1st, 2024. This serves as a minimum tax payment on income generated through their business activities.

Calculating Advance Tax:

While the specific calculation method for advance tax remains to be prescribed, the notification clarifies that a minimum annual amount of Rs. 1,200 applies if the calculated advance tax is zero.

Exemptions:

Businesses whose income is entirely exempt from income tax under any provision of the Income Tax Ordinance are not subject to advance tax payments under this scheme.

Tax Reduction Incentive:

The notification offers a 25% reduction in advance tax liability under two conditions:

  • Lump Sum Payment: Pay the entire remaining advance tax for the year on or before any of the scheduled due dates.
  • Income Tax Return Filing: File an income tax return for the previous tax year (2023) before the due date for the first monthly advance tax installment.

Payment Methods and Due Dates:

  • Start Date: Advance tax payments begin on July 1st, 2024.
  • First Payment Due: The first installment is due on July 15th, 2024.
  • Subsequent Payments: Advance tax is payable on the 15th of every month thereafter.
  • Payment Modes: Taxpayers can make payments:
    • Through a separate Computerized Payment Receipt using a PSID generated by the Tajir Dost module.
    • Via the FBR portal.
    • In person at FBR Tax Facilitation Centers.

Future Amendments:

The FBR reserves the right, with ministerial approval, to modify or amend the scheme’s provisions as needed.

Conclusion:

Part II of S.R.O. 420(I)/2024 introduces a new system for advance tax payments for small businesses under the Tajir Dost scheme. Understanding these regulations ensures businesses comply with their tax obligations and potentially benefit from tax reduction incentives. It’s important to stay updated on the FBR website for any further details regarding the advance tax calculation method.

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