The cabinet has approved a value-added tax (VAT) payback plan for welfare recipients.
The scheme is intended to create more disposable income for low-income earners while strengthening their purchasing power.
The six-month scheme, capped at 500 baht a month, will start in November this year.
Based on the current 7% VAT rate, welfare smart card holders will get 5% VAT back for every purchase they make.
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 Pracharat shops.
Some 5.3 million out of the 11.4 million recipients of the government's scheme are living below the national poverty line of 30,000 baht a year.
Finance permanent secretary Prasong Poontaneat estimated that the VAT payback scheme will cost the government up to 5 billion baht.