The Federal Board of Revenue (FBR) has allowed entire Tier-1 retailers who have integrated all their point of sales (POSs) with the Board's system, to adjust input tax to the extent of 95 percent of the output tax for the tax period.
The FBR has amended SRO 1190(I)/2019 through an SRO 344(I)/2020 issued here on Thursday.
According to the SR0 344(I)/2020, the said new provision would be applicable on all Tier-1 retailers who have integrated all their POSs with the Board in terms of Chapter XIV-AA of Sales Tax Rules, 2006. These retailers have been allowed to adjust input tax to the extent of 95 percent of the output tax for the tax period and the excess amount shall be carried forward to the next tax period.
Tier-1 covers a retailer operating as a unit of a national or international chain of stores; a retailer operating in an air conditioned shopping mall, plaza or centre excluding kiosks; a retailer whose cumulative electricity bill during the immediately preceding 12 consecutive months exceeds Rs 600,000; and a wholesaler-cum-retailer engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers and a retailer, whose shop measures 1,000 square feet in area or more.
According to a tax expert, the FBR had issued SRO 1190(I)/2019 with respect to applicability of section 8B of Sales Tax Act, 1990 (STA). The section 8B provides that input tax amount, exceeding 90 percent of the output tax for a period, shall not be allowed to be adjusted in that period and will be carried forward to next tax periods.
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