Taxmen deputed at big retail outlets to monitor sales

ISLAMABAD: The Federal Board of Revenue (FBR) has deputed Inland Revenue Officers at big retail outlets, who have not been integrated with the Point of Sale (POS) system, for monitoring of their sales for payment of sales tax.

Sources told Business Recorder here on Thursday that the FBR has deputed sales tax officers such big retail outlets under section 40B of the Sales Tax Act 1990.

In this regard, some major retailer outlets in Islamabad and Rawalpindi have been subjected to the provisions of section 40B of the Sales Tax Act 1990.

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The FBR has made operational Terms of Reference (TORs) for integration of retailers into the POS system.

According to sources, some Tier-I retailers were reluctant to be integrated with POS system despite repeated reminders of the FBR.

To deal with such retailers, the FBR has started deputing IR officers at their sales premises to check sales.

The presence of the IR officers at these places force the retailers to get themselves registered with the POS system of the FBR.

So far, 10,767 sales points have been integrated with Point of Sales Linked Invoicing System.

The government has incentivised the retailers by giving tax credit on electronic cash registers during the new budget 2021-22.

The underlying rationale is to give incentives to the taxpayers in order to broaden the tax base and at the same time, reiterated to take stern action against tax evaders who are not willing to be part of the tax net.

The finance minister urged the FBR to strictly adhere to timelines and benchmarks and follow-up the whole exercise for broadening tax base on a regular basis.

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The finance minister had also directed the FBR to gather data by undertaking interim measures such as mystery shopping exercise to identify anomalies as well as adding new entrants into the system to yield efficient results under the POS.

The TORs have been formulated in consultation with key stakeholders including representatives from the private sector to have a proper system of check and balance in place, the meeting was informed.

In order to facilitate and encourage integration of tier-1 retailers, the POS machines imported for installation on retail outlets as are integrated with the Board's Computerized System have been granted exemption from sales tax.

Moreover, sales tax rate on textile and leather items through POS integrated retailers has been reduced from 12 percent to 10 percent.

Moreover, in order to enhance cost of retailers not integrated with the FBR's online system, disallowance of input tax adjustment by such retailers has been further enhanced to 60 percent.

Last month, the finance minister informed media that the government would initially offer prizes of Rs25 million to the consumers for participating in the lottery scheme.

The consumers would demand the retail outlets provide printed/documented receipts to participate in the lottery scheme.

The amount of prize would be raised to Rs1 billion per month taking the total to Rs12 billion in one year.

The consumers would "force" the retailers to give documented receipts, which would increase registration of the POS with the FBR system.

The FBR cannot depute tax officials at each retail outlet to daily check transactions, but the consumers will themselves pursue the retailers to provide printed receipts.

The FBR had announced cash back facility to the customers of big retailers under which they can get back five percent of the paid sales tax as cashback on eligible goods at approved outlets of Tier-1 retailers.

This shall apply to the customers of Tier-I retailers, who have integrated their retail outlets with the board's computerised system for real-time reporting of sales.

All customers of Tier-1 retailers are entitled to redeem five percent of the sales tax paid as cashback on eligible goods of the tax amount as inscribed on the invoice issued by the Tier-I retailers.

Under the rules, all customers of Tier-1 retailers are entitled to redeem five percent of the sales tax paid as cashback on eligible goods of the tax amount as inscribed on the invoice issued by the Tier-I retailers.

To redeem, the cash online, the customer shall log on to the mobile application.

Soon after log on, an independent FBR wallet account shall be created for each customer.

Approved outlet shall also create an independent FBR wallet account for each customer. An identical FBR wallet account shall be created for each point of sale by the approved outlet.

The customer shall verify the electronically-generated invoice through the mobile application.

As soon as the electronically-generated invoice is verified, the system shall automatically calculate the five percent amount of the tax paid on the invoice.

The customer may redeem the earned amount within one month of his purchases accumulated in his FBR wallet account on any approved outlet who shall refund the amount accumulated in the wallet account of the customer after ensuring that the earned amount is transferred from the customer's wallet account to the approved outlets wallet account, the FBR rules added.

Copyright Business Recorder, 2021