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01 April 2024

Pakistan introduces special procedure for tax payments by traders and shopkeepers

The Pakistan Federal Board of Revenue (FBR or the Board) has outlined a special procedure to levy tax on small traders and shopkeepers known as the "Tajir Dost (Special) Procedure, 2024." In this context, shopkeepers include wholesalers, dealers, retailers, and manufacturer-cum-retailer, importer-cum-retailer or such person who combines the activity of retail and wholesale with any other business activity or other person in the supply chain of goods.

The procedure is applicable from 1 April 2024, although advance payment of tax will be effective beginning 1 July 2024. Shopkeepers will need to apply for registration by 30 April 2024.

The procedure applies to shopkeepers and traders operating a fixed place of business within the city limits of Karachi, Lahore, Islamabad, Rawalpindi, Quetta and Peshawar. Fixed place of business includes a shop, store, warehouse, office or similar physical place. The procedure shall not apply to persons operating through a company as units of national or international chain stores or to any other persons specified by the Board.

Advance tax will be paid on monthly basis through a computerized payment process. The first installment will be paid on 15 July 2024 and additional installments will be due on 15th day of each month thereafter. The formula calculating advance tax will be prescribed; however, every person shall be liable to pay minimum advance tax of PKR1 1,200 per year.

A person's advance tax payment can be reduced by 25% of the total amount if the person:

  • Pays the whole or the remaining balance of the advance tax for the applicable tax year in a lump sum before any due dates
  • Files the income tax return for the tax year 2023, if the return has not yet been filed, before the due date for the first monthly installment

Certain requirements remain applicable, including: computation of income; collection and deduction of tax, super tax, deemed income tax and minimum tax; return filing; assessment; and appeals, including advance tax.

Note that this Tax Alert is general in nature and is not a substitute for detailed research or the exercise of professional judgment. Accordingly, no decision on any issue should be taken without seeking specific professional advice and further consideration.

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Endnote

1 PKR is the abbreviation for the Pakistan Rupee.

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Contact Information

For additional information concerning this Alert, please contact:

EY Ford Rhodes, Karachi

EY Ford Rhodes, Lahore & Islamabad

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2024-0712

 
 

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