In a bright pink shalwar kameeez and matching headscarf, Nargis marches around one of Pakistan's richest neighbourhoods on a mission to embarrass residents into paying their taxes.

Armed with a bundle of paperwork, the 32-year-old raps on the gate of a mansion whilst a pickup truck full of guards and tax officials remains at a distance.

The householder who answers grins nervously at Nargis, who is a "hijra" – a member of Pakistan's increasingly assertive transgender community. With a sheepish look to see whether anyone is watching from the street, the owner meekly accepts a bill for outstanding property tax and municipal fees.

Given his effusive promises to pay as soon as possible, there is no need for what Qazi Aftab, the head of tax collection for the Clifton cantonment board in Karachi, calls "the nuclear option" – clapping, shouting and generally making a scene. "Because of the neighbours they get very embarrassed," he said. "Usually just one minute of shouting is enough and then they pay up."

It's even more mortifying on an ordinary day, when groups of four hijras exercise their powers of persuasion on the doorsteps of Karachi, where there is a tradition of rich and well-connected residents ignoring tax demands.

The lone hijra approach seems to work well enough. On the third floor of an apartment block one tenant pretended to be a visitor from out of town and closed the door in Nargis's face. After a few minutes of knocking he relented.

The authorities are extremely pleased with their efforts to combat the tax dodgers. Aftab says recovery rates are up 15% from when conventional tax collectors often clashed violently with householders. That never happens with the hijras, he said.

For centuries hijras in South Asian society have been both respected and exploited. Their blessings on a newborn child are regarded as propitious, while the curses of hijra beggars are to be avoided. In cities they are often found at traffic lights, dancing and demanding money from motorists. But their work as entertainers, wedding dancers and beggars often transmutes into prostitution.

Several hours after Nargis has finished her rounds, in a nearby market a gang of hijras work evening crowds of men going to restaurants, a licensed beer store and a gun shop. They hold out their hands, as if begging. If they sense a potential customer, they'll quietly try to negotiate a price for sex.

"Begging and sex work is not an honourable job," says Nirma, a thickset 30-year-old wearing heavy eye makeup and a green sari. But she claims to earn up to £20 a customer and is not impressed by the tax collectors' £90 a month salary. Others say the government should find them jobs singing on television shows.

Then again, times are tough, Nirma concedes. Another group of hijras has been encroaching on her patch, she says, and customers are turning to the growing number of female prostitutes in Karachi.

Although some claim to be born into the third sex, most hijras are either cross-dressers or pay up to £400 to be surgically castrated. Also available from surgeons prepared to risk performing the unlawful operations are breast implants costing up to £630.

Full sex-change procedures can be illegally obtained but, according to one hijra, are much too risky in Pakistan.

Hijras usually live in groups with their "gurus", men who are part protectors, part business mangers – many would say pimps. Harassment, rape and violence is a problem. A 2009 incident in which a group of wedding dancers were raped by police prompted the supreme court to try and improve their lot, giving hijras the right to vote and recognition as a separate gender on ID cards.

A court order that the government should find jobs for hijras that exploited their "special skills" led Karachi to set up the tax collecting scheme, although today only 18 hijras are permanently employed.

Like many other interest groups in Pakistan, the hijras find much to disagree on. At least two rival groups claim to speak on transgender issues, the All Pakistan Eunuch's Association and the Shemale Foundation of Pakistan. The latter is especially active and has called for reserved parliamentary seats for transgendered people.

Not everyone in the transgendered community is impressed by the debt collecting initiative, which is soon to be emulated in Punjab province. "It's just so demeaning," says Natasha. "It's no different from begging."

The 22-year-old wears tight jeans and sleeveless shirt rather than more traditional women's clothes. She sees herself as the face of a modern form of the hijra tradition. Although she still goes on "the occasional date with friends", she has given up having sex for money.

Because of the supreme court initiative she now works as an assistant supervisor at a branch of the national ID card agency. "It means I live like a normal human being," she said.

But Natasha is disappointed by the unwillingness of hijras to give up lucrative prostitution. Many, she says, are not interested in their new rights, including the ID card carrying the word transgender or "intersex".

"We are calling like hell to them to come and get their cards, but they don't want to come," she said. "I feel like a fool for fighting for them."