The six-month period of value-added tax (VAT) payback to welfare smartcard holders is estimated to cost the government 3 billion baht.
The VAT refunds capped at 500 baht a month will start in November, said Finance Minister Apisak Tantivorawong.
The measure will go before the cabinet next week or the week after, he said.
Welfare smartcard holders will get VAT back for every purchase of goods subject to the 7% tax by the 15th of the following month via the cards.
At present, smartcard holders can withdraw money stored on the cards.
Mr Apisak said the data generated every time a smartcard is swiped will be sent to the Revenue Department to verify which products are purchased and how much VAT is charged.
Based on the 7% VAT, welfare recipients must purchase 7,000-8,000 baht a month to receive 500 baht back from VAT return.
The VAT refund at first will apply only to goods bought at Thong Fah Pracha Rat shops; the scheme will be extended to grocery shops and modern trade stores within a few months, Mr Apisak said.
Commercial bank system installations will let non-Thong Fah Pracha Rat shops accept welfare smartcard payments and link information to the database of the Comptroller-General's Department.
The VAT payback is the government's new short-term measure to assist low-income earners by creating more disposable income for them to strengthen their purchasing power and boost domestic consumption.
Although the country's economy grew by 4.8% year-on-year in the January-June half, the recovery remains uneven, with low-income brackets still facing hardship.
Addressing the root causes of poverty is a government priority.
The government is offering a monthly living allowance of 200-300 baht to 11.4 million people earning no more than 100,000 baht a year to buy goods at Thong Fah Pracha Rat shops.
Those who signed up for job training receive an additional living allowance of 100-200 baht a month.
Some 5.3 million out of 11.4 million recipients of the government's welfare and subsidy scheme are living below the national poverty line, earning up to 30,000 baht a year.
Mr Apisak said recently that the VAT payback is not considered a tax refund, as it will be financed by the state's annual budget.