A survey conducted by Regional Tax Office (RTO) Islamabad along with customs department revealed that most of the outlets/shops in the federal capital are involved in selling smuggled goods under the cover of imported items and they are directed to display retail prices on imported items and register themselves with Point of Sale (POS) system.
Sources told Business Recorder here on Friday that the RTO Islamabad has taken some major initiatives for POS integration of Tier-1 retailers with FBR's online system, implementation of the CNIC condition from Feb 1, 2020 and display of retail prices on imported items at retail outlets located within the territorial jurisdiction of the RTO Islamabad.
According to a report of the RTO Islamabad, during the course of anti-smuggling & tax awareness campaign, jointly conducted by Customs and IRS officers, it was observed that most of the outlets were selling imported goods with no corresponding GDs for import of such items clearly showing that these were smuggled goods. Keeping in view this aspect, the traders were asked to avoid selling smuggled goods and also to display retail prices on imported items as envisaged in amendment in the Third Schedule vide Finance Act, 2019-20. But unfortunately most of the large retail stores have not complied with the requirement of law due to which they are still charging high prices from the consumers. The POS integration will also restrict the sale of smuggled items by such outlets.
The RTO Islamabad initially intends to register 500 retailers and 300 restaurants. So far, 93 retailers and restaurants are in process of integration and out of them, 44 are fully integrated with the FBR.
The POS integration is the government's first step towards documentation of economy and conversion of manual records to transparent online availability of records. When sales are going to be documented then entire chain of transactions will also be documented and issuance of fake/flying invoices will be minimized. Benefits of this integration include online automated updation of Annex-C which will reduce cost of maintenance of records. Since the FBR also intends to give five percent of sales tax cash rebate to those consumers who have made shopping from Tier-1 retailers and verified the invoice from FBR through his/her Tax Asaan App. By this way, consumer will naturally opt to make purchases from only POS certified retailers and ultimately turnover of POS registered retailers will increase. This process of integration will further reduce interaction of FBR officials with retailers.
Sources said that the apprehensions expressed by some of the tier-1 retailers about the chargeability of sales tax on 3rd Schedule items, exempt items and zero rated articles, are totally unfounded as the POS integration is to be made with the software already installed by the retailers, which is already segregating these items accordingly and sales tax is only charged on items where sales tax is required to be charged. The only difference will be that the invoice number and QR code will be provided by the POS integrated application, which the consumer can verify through the Tax Asaan Application on their smart phone. The RTO Islamabad has already started a tax awareness campaign, and in this regard presentations are being given at various universities to educate the students on how to use the Tax Asaan App for invoice verification and to report fake/frivolous invoices issued by unscrupulous people. The system once implemented will not only safeguard the government revenue but will inculcate a tax culture among the masses who will make it sure that the taxes they have paid has actually reached the government treasury.
It will also resolve long outstanding demand of retailers that they are frequently harassed by FBR officials as process of installation of POS will minimize the chances of official visit as their sales will be monitored online and only under exceptional circumstances of reports of tampering with/bypassing the system being reported or parallel system being maintained by the traders action will be taken. In such a situation, the Second Amendment (Ordinance) 2019 has introduced imposition of heavy penalties.
The government is committed to implementing the mandatory use of CNIC for all transactions over Rs 50,000, with the objective of widening the tax net. In this context, it is worth mentioning that the said amendment was twice postponed on the demand of traders' community. The new dead line for referred amendment is Feb 01, 2020. The federal government has time and again accepted the demand of traders in shape of extension in mandatory use of CNIC, enhancement of electricity bill of retailers from six hundred thousand rupees to twelve hundred thousand rupees and reducing turnover tax from 1.5% to 0.5 % on small traders turnover etc.
Now it is the traders' turn to reciprocate the good gestures of the government by implementing the agreement made with the government in its letter and spirit by making this documentation drive successful and paying their due taxes in the larger interest of nation.
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