Retailers registration scheme begins on April 1

ISLAMABAD: In a bid to comply with the demand of IMF, the government has launched registration of Tajir Dost Scheme in six largest cities of the country, including four provincial capitals and Rawalpindi as well as in Islamabad. The cities where Tajir Dost Scheme has been launched includes Karachi, Lahore, Islamabad, Rawalpindi, Quetta and Peshawar in the first phase.

This step coincided with an announcement by the finance minister that Pakistan was set to launch $300m Yuan-denominated Panda bond and external debt to be paid on time as sufficient foreign exchange reserves are available.

Under Tajir Dost Scheme, the retailers will kick start registration from April 1, 2024 and then the tax collection will take place from July 1, 2024. The FBR will take online marketplace platform into the tax net as well under this scheme. “We intend to bring one million retailers into the tax net,” said one top official of the FBR on Friday when contacted by The News.

According to Statutory Regulatory Order (SRO) 420(1)/2024 on Friday, the draft special procedure for small traders and shopkeepers which the FBR proposes to prescribe under section 99B of the Income Tax Ordinance, 2001 (XLIX of 2001) was published by the FBR and the board sought objections or suggestions for its consideration within seven days of the publication of the draft in the official gazette.

The draft of Tajir Dost Scheme says: In exercise of powers vested in the FBR under section 99B of the Income Tax Ordinance, 2001 (hereinafter called the Ordinance), the following special procedure for small traders and shopkeepers to be called Tajir Dost Scheme, 2024 (hereinafter called the scheme), is hereby prescribed.

This scheme shall apply to the traders and shopkeepers operating through a fixed place of business including a shop, store, warehouse, office or similar physical place (hereinafter referred to business premises) located within the territorial civil limits including cantonments in the cities as specified in the schedule to this scheme for registration and payment of minimum advance tax. It shall not apply to a person -being a company or; operating as a unit of national or international chain stores in more than one city or; a person or a class of persons specifically excluded by the Board.

The board said scheme shall come into force with effect from April 1, 2024 except Part-II, which shall come into force with effect from July 1, 2024.

It says every trader and shopkeeper shall apply for registration under section 181 of the Ordinance or through Tax Asaan app or on FBR’s portal or through FBR’s Tax Facilitation Centers by 30th day of April, 2024. If a person, who is required to be registered, the Commissioner Inland Revenue shall register the trader or the shopkeeper as the case may be.

About the minimum monthly advance tax payable by a person, it says every person shall be liable to pay monthly advance tax in accordance with this paragraph. The advance tax paid under sub paragraph (1) shall be the minimum tax in respect of income from the business covered under this scheme. The amount of monthly advance tax for a tax year shall be computed in the manner as may be prescribed. It says: “Where the advance tax computed under sub paragraph (3) is zero, the advance tax payable under the sub paragraph (1) shall be Rs1,200 per annum. Provided that where the income of the person is exempt from income tax under any provision of the Ordinance, sub-paragraph (1) shall not apply. Provided further that the advance tax payable shall be reduced by twenty five percent of the whole or the balance: — if the person pays in lump sum the whole or the balance as the case may be, of remaining advance tax for the relevant tax year on or before any of the due dates for payment of such tax under the said paragraph; or if the person who has not filed income tax return, files income tax return for Tax Year 2023 before the due date for payment of first monthly installment.

“Mode and manner of payment of advance tax. The monthly advance tax payable under paragraph 5 shall be paid with effect from Ist day of July, 2024 for the relevant tax year and the first payment will be due on 15’ of July, 2024 and thereafter on 15’ of every month. The tax payable under paragraph 5 for a tax year shall be paid through a separate Computerized Payment Receipt against the Payment Slip ID (PSID) generated by Tajir Dost module or through FBR’s portal or through FBR’s Tax Facilitation Centers.

The Board with the approval of Minister in Charge may amend the scheme from time to time so as to add, alter, omit or modify any provision therein.

Meanwhile, during an interaction with the foreign media at the Ministry of Finance here, Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Friday for the first time in its history, Pakistan is set to launch Yuan-denominated Panda bond of up to $300 million this year.

The finance minister said the initial Panda bond sale would range between $250 and $300 million with the possibility of more issuances. The minister said Pakistan would be able to pay its outstanding external debt on time, as it possessed sufficient foreign exchange reserves.

The payments of debt, he said, would not strain the exchange rate and the rupee was expected to remain stable. “As we go forward, I think it’s going to remain range-bound around these levels,” he said, adding that the “wildcard” was the oil prices, which remained uncertain given the Red Sea attacks.

The IMF in its recent statement said Pakistan had expressed interest in a new medium-term program to improve its fiscal and external weaknesses and strengthen its economic recovery.

Aurangzeb said Pakistan will seek a new loan program from the IMF of at least three years. Further details will be worked out after the Washington-based lender’s annual spring meetings, he said.

Cash-strapped Pakistan’s standby $3 billion arrangement with the global lender expires on April 11 and the two sides reached a staff-level agreement regarding the disbursement of the final tranche of $1.1 billion earlier this week. “We have expressed our strong interests in an Extended Fund Facility with the IMF, but the quantum is not clear yet,” Aurangzeb said, adding that the lender was “very receptive” to the request.

The US has also been “very supportive” in the matter, the minister said.

Prime Minister Shehbaz Sharif has directed his finance team to begin work on seeking an extended fund facility from the IMF. On Thursday, he had termed a long-term bailout from the IMF “inevitable”.

The IMF had also said it would support formulating a new economic program for the country if it asked for one. The Washington-based lender’s rescue package last summer had helped the country avert a default but, to secure it, the country had to revise its budget, and raise interest rates, taxes and electricity and gas prices.

As a result, during the period, Pakistan struggled through inflation as high as 38%, historic depreciation in its currency and contraction of the economy. In an interview with Bloomberg on Friday, the federal finance minister said, “Selling Yuan-denominated debt would allow Pakistan to diversify its funding sources and reach investors in a new market.” It’s something “we should have looked at quite frankly some time back,” he said. China has the “second-largest and deepest bond market in the world” and it is the “right thing to do for the country” to tap the market, given Pakistan has already sold dollars and Eurobonds, he said.