Tajir Dost fails to boost tax compliance

The Federal Board of Revenue’s (FBR) nearly five-month tax registration drive in 42 cities has brought thousands of traders onto the tax roll, but an average income tax collected from an individual under the Tajir Dost Scheme (TDS) is around Rs2,432 per month. Despite contributing 20pc to the gross domestic product, the tax contribution of the retail and wholesale sector stands at a mere 4pc. The government has been striving for years to effectively bring this sector into the tax net. Only 300,000 of an estimated 3.5 million retailers are actively filing tax returns. The TDS aims to bring the remaining 3.2m into the tax net. Since April 1, tax authorities have registered over 64,000 traders under the scheme. In the first phase, the scheme was implemented in six cities: Karachi, Lahore, Islamabad, Peshawar, Quetta and Rawalpindi. The registration scope was extended to another 36 cities in July.