The FBR said that the Finance Act, 2019 added sub-section 6 to the Section 8B of the Sales Tax Act, 1990 whereby a Tier-1 Retailer who did not integrate its retail outlet in the manner prescribed under sub-section 9A of Section 3 of the Sales Tax Act, 1990 during a tax period, its adjustable tax for the period would be reduced by 15 per cent. The figure 15 per cent has been raised to 60 per cent through Finance Act, 2021.
The FBR further said that in order to operationalize the important provision of the law, a system-based approach has been adopted whereby all Tier-1 retailers, who are liable to integrate but have not yet integrated, with effect from July 2021 (Sales Tax Returns filed in August, 2021) are to be dealt with as per the procedure laid down in STGO No. 1 of 2022 issued on August 3, 2021.
Through the latest STGO No. 04 of 2022, a list of 608 identified Tier-1 retailers has been placed on the FBR’s portal allowing them to integrate with the FBR’s system by November 10, 2021 and the procedure of exclusion from this list of 608 identified Tier-1 retailers shall apply as laid down in Para 2 STGO 1 of 2022 dated August 3, 2021.
Upon filing of sales tax return for the month of October 2021 all notified Tiler-1 retailers having yet integrated, the input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount.