IMF agrees to scrapping of Tajir Dost Scheme

ISLAMABAD: The International Monetary Fund (IMF) has agreed to scrap the Tajir Dost Scheme (TDS) after the Federal Board of Revenue (FBR) shared data indicating that tax collections from retailers, wholesalers, and Associations of Persons (AOPs) have far exceeded the Rs50 billion target initially envisaged under the scheme.

Following the broader agreement with the IMF to abandon the TDS, the FBR has introduced Video Analytics Rules for the electronic monitoring of production processes. This measure aims to accurately gauge real production levels and bring more goods into the tax net. While the IMF mission has concluded its review talks, no decision has been made yet regarding the FBR’s request to reduce tax rates for the real estate sector.

A top government official confirmed to The News on Friday that the IMF was convinced to drop the TDS after being presented with data showing that the FBR had collected over Rs400 billion from the trading activities of retailers, wholesalers, and AOPs. With the potential for further tax revenue collection in the remaining four months (March to June 2025), the IMF agreed to abandon the TDS, which had proven ineffective from the outset.

The FBR has significantly increased revenue collection through Sections 236G and 236H, which impose higher tax rates on unregistered retailers and wholesalers. The FBR also shared data with its field formations, bringing more unregistered retailers into the tax net.

“We have agreed with the IMF that a tax-to-GDP ratio of 10.6 percent will be achieved during the current fiscal year 2024-25, ending on June 30, 2025,” said a top official. He added that the overall nominal growth and size of the economy have shrunk compared to earlier projections, allowing the FBR to meet the desired target of 10.6 percent of the GDP. It is estimated that the FBR’s tax collection target has been revised downward from Rs12,970 billion to Rs12,350 billion for the current fiscal year.

Under SRO 364 (I) 2025, issued in exercise of powers conferred by Sections 50 and 40C of the Sales Tax Act, 1990, and Sections 40 and 45A of the Federal Excise Act, 2005, the FBR has introduced amendments to the Sales Tax Rules, 2006. These amendments include: In Chapter XIV-BA, the heading has been revised to replace “video analytics rules for electronic monitoring of production of specified goods” with “electronic monitoring of production of specified goods.”

In Rule 150ZQR, after the words “video surveillance,” the phrase “, video analytics solution” has been inserted.

Rule 150ZQT: Goods to be Monitored Electronically: Production of specified goods manufactured in Pakistan shall be monitored through video surveillance, video analytics solutions, and digital eye technology by installing production monitoring equipment at production lines, as approved by the Board, for (a) real time capture of production process; (b) real time collection of data that shows production through object detection and object counting; (c) transmission of data to Central Control Unit (CCU) at Board on real time basis, storage and archiving of data (d) detection of unexpected stops; (e) quantitative analyses of productions; and (f) data analytics for required legal actions.

No person engaged in the manufacturing of specified goods shall remove production from their business premises unless it has undergone the process of production monitoring under these rules.

Functions and Responsibilities of the IT Team of the Board: The IT team shall perform functions as specified by the Board. The word “licensing” shall be replaced with “approval.” Sub-rule (8) has been revised to state that the qualified applicant shall deposit an unconditional bank guarantee equivalent to 5 percent of the project cost or Rs5 million, whichever is lower, to the approval committee before the issuance of authorisation under these rules.

Sub-rule (9) has been amended to state that the bank guarantee shall remain valid for the entire duration of the authorisation and shall be encashable in case of violations of these rules or the terms of the agreement.