The Federal Board of Revenue (FBR) is set to introduce a new registration scheme for shopkeepers and traders in the upcoming Finance Bill (2025-26), following the shortcomings of the previously implemented Tajir Dost Scheme. Officials have confirmed that the new scheme has been drafted and will be announced as part of the federal budget for the next fiscal year. However, the key features of the scheme have yet to be discussed with traders’ associations and representative bodies.
The Tajir Dost Scheme, which registered approximately 70,000 to 75,000 shopkeepers and retailers, generated tax payments in the millions but failed to achieve its broader objectives. Traders’ leaders have raised strong objections to the introduction of a new scheme, arguing that it is unnecessary given the amendments made to the Income Tax Ordinance 2001 in the last budget.
Under the amendments, Section 236G and Section 236H of the Income Tax Ordinance were revised to reduce advance tax rates. The advance tax on purchases (Section 236G) was lowered from 2 percent (non-filer rate) to 0.1 percent (filer rate) for purchases made by distributors, dealers, and wholesalers from manufacturers or commercial importers. Similarly, the advance tax on sales to retailers (Section 236H) was reduced from 2.5 percent (non-filer rate) to 0.5 percent (filer rate). Non-filers, however, continue to pay higher rates of 2 percent and 2.5 percent under Sections 236G and 236H, respectively.
Traders argue that the FBR should focus on enforcing return filing from unregistered retailers using data collected under Sections 236G and 236H, which have significant revenue potential. They believe this approach would be more effective than introducing a new registration scheme.
The FBR’s new scheme aims to address the challenges faced in the Tajir Dost Scheme and improve tax compliance among shopkeepers and traders. However, the lack of consultation with stakeholders and the existing mechanisms under Sections 236G and 236H have raised concerns about the necessity and effectiveness of the proposed initiative. The details of the scheme are expected to be unveiled during the budget announcement.
