The Federal Board of Revenue (FBR) has significantly underperformed in its tax collection efforts under the Tajir Dost Scheme, a program proposed by the International Monetary Fund (IMF). For the first quarter of the current fiscal year, the FBR has collected less than Rs. 1.3 million, falling short of the Rs. 10 billion target by 99.99 percent.

By mid-October, fewer than 600 traders had contributed to the scheme, highlighting the challenges faced in bringing retailers into the tax net. The federal government is now tasked with collecting Rs. 23.4 billion under the FBR scheme for the October-December 2024 quarter, in addition to achieving a yearly goal of Rs. 50 billion.

The IMF, in its latest report on Pakistan, emphasized the importance of the Tajir Dost scheme, which aims to increase tax revenues from retailers. The scheme is part of a broader strategy to implement the Compliance Risk Management (CRM) framework and expand the Compliance Improvement Plan (CIP), with an overall revenue generation target of Rs. 250 billion.

Despite the shortfall in the first quarter, the government remains committed to expanding the scheme to additional cities. A Statutory Regulatory Order (SRO) was expected to be issued by July 2024 to facilitate this expansion, with mandatory tax collection set to begin in the first quarter of FY25.

The expansion of the Tajir Dost scheme to 36 additional cities is a key component of the government’s efforts to integrate the service sector into the tax net, demonstrating a continued commitment to improving tax compliance and revenue collection.