Tax Net Boost

The launching of the Tajir Dost Scheme by the Federal Board of Revenue is a step taken in the right direction to address the longstanding issue of tax evasion. The government is finally implementing a plan to tackle this issue, promising a higher tax revenue for the state.

This scheme aims to integrate traders and wholesalers into the formal tax framework by April 30. To incentivise participation, it offers free registration and various tax-related benefits. This would ensure that the burden on honest taxpayers would be reduced, and a fair share would be contributed to the national revenue by everyone, thereby increasing the government funds for development projects.

Unlike past approaches that involved voluntary registrations only, this approach seeks to target all unregistered traders with a policy of imposing fines on those people who fail to comply with the law. This marks an end to the previous lenient penalties for non-compliance, thereby putting pressure on people to register voluntarily, knowing that there will be consequences for a failure to abide by the policies. Previous policies such as the Voluntary Return policy may have encouraged many individuals to take advantage of the loopholes in the system without having to face any serious penalties. With this initiative, the government aims to prevent such gaming of the system.

Registration can be done easily through the Tax Asaan app or FBR’s web portal without the need for tax professionals. Incentives include discounts on advance tax payments for timely registration and filing. This move will significantly address the low tax contribution from the retail and wholesale sectors, targeting 3.2 million unregistered retailers. The tax base will be enhanced. However, the government must now push this registration scheme aggressively and consistently to signal the urgency of the situation.

To reduce Pakistan’s dependency on IMF bailouts, this move becomes important to drive the nation out of its financially unstable state. Having a broader tax base would ensure that the government has enough budget to improve the infrastructure of the country and would allow it to foster investments and reduce its budget deficit. Initiatives like these then become vital to strengthen the overall economy of the country with as little reliance on external assistance as possible.

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