FBR Introduces Fixed Monthly Tax Scheme for Small Businesses in 42 Pakistani Cities

FBR Introduces Fixed Monthly Tax Scheme for Small Businesses in 42 Pakistani Cities

The Federal Board of Revenue (FBR) has rolled out a new tax initiative targeting small shopkeepers and retailers across 42 cities in Pakistan. This scheme, known as the Tajir Dost Special Procedure, 2024, establishes fixed monthly tax payments ranging from Rs. 100 to over Rs. 20,000.

Under this new system, the FBR has classified shops based on their location and issued market-specific guidelines for Indicative Income, Indicative Income Tax, and Monthly Advance Tax requirements. The initiative aims to streamline tax collection from small traders and simplify the process for business owners.

The scheme applies to a wide range of urban centers, including major cities like Karachi, Lahore, Islamabad, and Peshawar, as well as smaller towns such as Ghotki, Hafizabad, and Toba Tek Singh.

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Key points of the new tax scheme:

  1. Shops measuring 50 square feet or less in commercial areas, makeshift shops, ‘khokas,’ kiosks, or small shops up to 5×3 square feet will pay a fixed advance tax of Rs. 1,200 per annum.
  2. The scheme covers various types of shopkeepers, including wholesalers, dealers, distributors, retailer-manufacturers, importer-retailers, and those combining retail and wholesale activities with other business operations.
  3. Individuals involved in the supply chain of goods are also required to pay the monthly tax installments.

The FBR has formalized this new tax structure through S.R.O. 1064 (I)/2024, which amends the existing Tajir Dost Special Procedure, 2024.

This move represents a significant shift in Pakistan’s approach to taxing small businesses, potentially affecting thousands of shopkeepers and retailers across the country. The FBR aims to increase tax compliance and revenue collection through this simplified, location-based tax system.