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License Issuance Procedures for Integration of Point of Sales of Tier-1 Retailers with FBR

FBR issues SRO 1063(1)/2021, Dated: 24th August 2021

Federal Board of Revenue (FBR) issues SRO No 1063(1)/2021, Dated: 24th August 2021 regarding the procedures and requirements for issuance of license to vendors for integration and installation of point of sales (POS) machines of Tier-1 retailers.

In exercise of the powers conferred by section 50 of the Sales Tax Act, 1990, the Federal Board of Revenue directed that the following further amendments shall be made in Sales Tax Rules, 2006 regarding the issuance of license for the installation and integration of the point of sales machines of the tier-1 retailers.

Main areas covered by this SRO are given here:

1- Licensing for integration of Point of sales – Rule 150ZQZH of Sales Tax Rules 2006

2- Requirements for application of grant of licence for installation of point of sales machines – Rule 150ZQZJ of Sales Tax Rules 2006

3- Complete Procedure for grant of licence for installation of point of sales machines of tier-1 retailers – Rule 150ZQZK of Sales tax Rules 2006

4- Right granted to the licensee – Rule 150ZQZL of sales tax Rules 2006

5- Renewal of licence – Rule 150ZQZM of Sales Tax Rules 2006

6- Which Technical support Licensee will provide ? – Rule 150ZQZN of Sales Tax Rules 2006

7- Procedure for cancellation or termination of licence – Rule 150ZQZP of Sales Tax Rules 2006

8- Fee and Charges – Rule 150ZQZQ of Sales Tax Rules 2006

9- Responsibilities of the Tier-I retailers – Rule 150ZQZR of Sales Tax Rules 2006

FBR Directions for issuance of License for integration of Point of sales – Rule 150ZQZH of Sales Tax Rules 2006

In the aforementioned Rules, after rule 150ZQZG, the following shall be inserted. The licensee shall be bound to follow the directions given by FBR while issuance of vendor license for installation of point of sales machines of tier-1 retailers.

(1) No person shall carry out integration of the retailers through software unless he has obtained a licence under these rules.

(2) No licensee under these rules shall maintain or operate system or provide any other service, which is not authorized under these rules.

(3) Every payment counter whether fixed or portable and generates invoices for receipt of payment either in cash or through debit or credit card shall be connected as per rule 150ZEB.

(4) Every licensee shall be bound to integrate the payment counter in the manner as prescribed under sub rule (4), (5),(16) and (17) of rule 150ZEB.

Requirements of Documents for application of grant of licence for installation of point of sales machines – Rule 150ZQZJ of Sales Tax Rules 2006

(1) An application for installation, configuration and integration of point of sale (POS) machine shall be made in duplicate to the Board.

(2) No application under sub rule (1) shall be considered, unless it is accompanied by:

a- registration certificate issued by Pakistan Software Houses Association or Institute of Chartered Accountants of Pakistan;

b- audited statement of accounts for the last three financial years;

c- list of major clientele;

d- incorporation certificate under the Companies Act;

e- National Tax Number (NTN) Certificate;

f- the paid up capital for the latest financial year is at least Rs.100 million or above;

g- registration with Sales Tax Department if required;

h- Computerized National Identity Cards (CNICs) of directors of the incorporated company;

i- undertaking that the company has never been blacklisted by any Government or Provincial department or organization and has not been involved in confirmed cases of fiscal fraud;

j- list of projects executed in the last three years; and

k- any other documents required through instructions orders issued by the Board.



Complete Procedure for grant of licence for installation of point of sales machines of tier-1 retailers – Rule 150ZQZK of Sales tax Rules 2006

(1) On receipt of application for grant of licence in the Board, the licensing committee shall scrutinize the document provided and it shall evaluate the eligibility of the applicant within seven days of receipt of application.

(2) The licensing committee may also carry out visits, if necessary for physical inspection to ascertain the eligibility of the applicant for licensing under these rules.

(3) The licensing committee shall send its recommendations to the Member (IR — Operations) and the Director General Retail within ten days of date of submission of the application, specifying reasons for recommending or rejection of any application under these rules.

(4) In case, the companies meet the criteria under these rules, the licensing committee shall make recommendations for grant of licences.

(5) The licensing committee shall grant the licence to the recommended companies with the prior approval of Member (IR — Operations) and Director General Retail.

Rights granted to the licensee – Rule 150ZQZL of sales tax Rules 2006

When license is issued to the vendor (Licensee) then he will available the following rights under the Rule 150ZQZL of Sales Tax Rules, 2006.

(1) A licensee shall have the right to install, configure, integrate, operate and maintain the point of sale on real time basis in accordance with conditions of the licence issued to him.

(2) The licence granted under these rules shall be subject to provisions of the Act and shall be valid for five years from date of issuance.

(3) The licence granted under these rules shall be non-transferable and shall not be allowed to be use by any sub-contractor.

Renewal of licence – Rule 150ZQZM of Sales Tax Rules 2006

(1) The application for renewal of licence shall be made to the Board three months before its expiry.

(2) The licensing committee shall evaluate the application and make recommendations to the Member (IR — Operations) and Director General Retail for renewal of licence.

(3) The licensee shall be required to comply with all the provisions of these rules for the renewal period.

Which Technical support Licensee will provide ? – Rule 150ZQZN of Sales Tax Rules 2006

(1) The licensee shall be responsible for post deployment maintenance of Point of Sale as detailed below:

– setting up and maintenance of all information technology equipment connected to point of sales; and the licensee shall be authorized to,

– upgrade of the system hardware and software; all bug fixes; and immediate response to trouble shooting of any post deployment problems for uninterrupted working of the system.

(2) The licensee shall be responsible for safe and secure capture of real time transmission of sales data from the retails outlet to FBR database at all times.

Procedure for cancellation or termination of licence – Rule 150ZQZP of Sales Tax Rules 2006

License Issuance Procedures of vendors for integration of point of sales machines of tier1 retailers

(1) The Project Director shall immediately refer the matter to the licensing committee for further action under these rules, if he, as a result of supervision of the system or on receipt of a report from any of the Commissioners Inland Revenue or on a valid complaint, has reasons to believe that the licensee has-

– failed to provide the required services to the satisfaction of the Board authorities;

– contravened any condition of the licence;

– contravened any provision of these rules or the Act; or

– violated any applicable law while carrying out activities of licence under these rules.

(2)- On receipt of reference from the Project Director under sub-rule (1), the licensing committee shall cause to serve a notice upon the licensee within fifteen days of receipt of reference, to show cause within thirty days after the date of the notice, as to
why the licence issued under these rules should not be cancelled or terminated:

Provided that in cases where the Licensing, on the basis of material evidence, is of the opinion that there exits Prima facie a sufficient case against the licensee, it may suspend the licence to safeguard public finances and to prevent any other serious
damage.

(3) The licensing committee may, after giving the licensee adequate opportunity of being heard and after examination of the record, cancel or terminate the licence issued under these rules.

(4) In case of cancellation of licence under these rules, the affected person or company shall have the right to file representation against the order of the licensing committee before the Board.

(5) The Board shall decide the representation after giving proper opportunity of being heard and the decision of the Board shall be final.



Fee and Charges – Rule 150ZQZQ of Sales Tax Rules 2006

The licensee shall keep in mind the following while charging of fees of installation and integration of point of sales machines of the Tier-1 retailers with the FBR system:

(1) The licensee shall charge the fee for configuration and integration of point of sales from the retailers.

(2) No fee shall be charged from any of the field formation of the Board.



Responsibilities of the Tier-I retailers – Rule 150ZQZR of Sales Tax Rules 2006

The responsibilities of the Tier-I retailer shall be to:

– make all payment counters comprising of point of sale at each out let, available for installation of the systems;

– be responsible for smooth functioning of point of sales;

– report to the Board and the concerned Commissioner Inland Revenue within twenty four hours of any operational failure, damage disruptions or tampering of the system; or

– report any inoperative point of sale to the Commissioner Inland Revenue holding the jurisdiction.

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