The Federal Board of Revenue (FBR) has directed 482 identified Tier-I Retailers (big retailers) to integrate with the FBR’s point of sale (POS) system by December 10, 2021 to avoid disallowance of input tax claims and creation of tax demands.
According to the FBR, the Finance Act, 2019 added sub-section (6) to section 811 of the Sales Tax Act, 1990 (“the STA, 1990”), whereby, a Tier-1 Retailer “(T-IR)” who did not integrate its retail outlet in the manner prescribed under sub-section (9A) of section 3 of the STA, 1990 during a tax period, its adjustable tax for that period would be reduced by 15 percent.
The figure of 15 percent has been raised to 60 percent vide Finance Act, 2021.
In order to enforce this important provision of tax law, a system-based approach has been adopted whereby all T-1Rs 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 3rd August 2021.
Vide the instant Sales Tax General Order, a list of 482 identified T-1Rs has been placed on the FBR’s web portal at www.fbr.gov.pk allowing them to integrate with the FBR’s system by 10th of December 2021 and the procedure of exclusion from this list of 482 identified T-1Rs shall apply as laid down in para 2 of STGO 1 of 2022 dated 03.8.2021.
Upon filing of sales tax return for the month of November 2021 for all hereby notified T-1Rs not having yet integrated, their input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount, the FBR added.