Taxation of Small Traders and Shopkeepers

Relevant Section: 99B

Relevant SROs: S.R.O. No. 457 (I)/2024 dated the 30th March 2024 amended vide S.R.O. 1064 (I)/2024 dated 22nd July 2024

Registration & Calculation of Tax under Tajir Dost Scheme

Introduction

The Federal Board of Revenue (FBR) has introduced the Tajir Dost Scheme to encourage unregistered businesses to declare their income and assets and become part of the tax net. This guide outlines the registration process and tax calculation methods under the scheme.

What is the Tajir Dost Scheme?

This voluntary tax compliance scheme offers benefits to unregistered businesses, including potentially reduced tax rates and simplified filing procedures. Businesses can declare their income and assets under the scheme.

How to register for the Tajir Dost Scheme?

  • Download the Tax Asaan app from the app store.
  • Open the app and locate the "Tajir Dost Scheme" option (if available).
  • Follow on-screen instructions to register, entering your ID card number, mobile number, and other required information.
  • Submit the registration form.

Who are Eligible for the Tajir Dost Scheme?

Official confirmation regarding eligibility is pending. However, the scheme likely targets unregistered businesses, particularly in sectors like:

  • Retail stores
  • Wholesalers
  • Service providers

Cities in Pakistan with Compulsory Tajir Dost Registration

As per SRO 1064(I)/2024, the following cities require compulsory registration:

  • Abbottabad
  • Attock
  • Bahawalnagar
  • Bahawalpur
  • Chakwal
  • Dera Ismail Khan
  • DG Khan
  • Faisalabad
  • Ghotki
  • Gujranwala
  • Gujrat
  • Gwadar
  • Hafizabad
  • Haripur
  • Hyderabad
  • Islamabad
  • Jhang
  • Jhelum
  • Karachi
  • Kasur
  • Khushab
  • Lahore
  • Larkana
  • Lasbela
  • Lodhran
  • Mandi Bahauddin
  • Mansehra
  • Mardan
  • Mirpurkhas
  • Multan
  • Nankana
  • Narowal
  • Peshawar
  • Quetta
  • Rahim Yar Khan
  • Rawalpindi
  • Sahiwal
  • Sargodha
  • Sheikhupura
  • Sialkot
  • Sukkur
  • Toba Tek Singh

How to Calculate Tax under Tajir Dost Scheme?

S.R.O. 1064 (I)/2024 clarifies and expands the scope of the Tajir Dost Special Procedure 2024.

How to Pay Tax under Tajir Dost Scheme?
After logging into the Iris portal,

  • Locate and click the "Tajir Dost" icon.
  • Provide business details. The system will retrieve your business information.
  • The portal will calculate your annual tax liability based on your business area.
  • Generate a Payment Slip ID (PSID) by clicking "Create PSID."
  • Use the PSID to pay your monthly tax installment through online banking or at a bank branch.

Key Points

  • Equal installments: The annual tax liability is divided into 12 equal monthly installments.
  • Auto-calculation: The system automatically calculates your annual tax liability based on your business area.
  • Online and offline payment: You can pay through online banking or at a bank branch.

Indicative Income- Tax Calculation under Tajir Dost Scheme

The scheme uses an indicative income-based tax calculation method. This means the tax liability is determined based on an estimated income, not detailed financial records. The "indicative income" refers to income determined by the Board based on factors such as rental value, location, and fair market value of the business property. This income is the basis for calculating advance tax.

Tax Slabs and Rates of Tajir Dost in Pakistan
The table below outlines the indicative income slabs and corresponding annual and monthly tax amounts:

Indicative Income Annual Tax Monthly Tax
Up to Rs. 600,000 Rs. 1,200 Rs. 100
Rs. 680,000 Rs. 12,000 Rs. 1,000
Up to Rs. 1,000,000 Rs. 60,000 Rs. 5,000
Rs. 1,350,000 Rs. 120,000 Rs. 10,000
Rs. 1,833,333 Rs. 240,000 Rs. 20,000
Rs. 2,233,333 Rs. 360,000 Rs. 30,000

Fixed Advance Tax

  • Shops of 50 square feet or less in a commercial area, makeshift shops ("khokas").