ISLAMABAD: The Federal Board of Revenue (FBR) has directed 96 unregistered big retailers (Tier-1) to integrate them with the FBR’s Point of Sale (POS) system to avoid denial to input tax credit.

The FBR has issued Sales Tax General Order (STGO) 8 of 2023 here on Friday.

The FBR has decided to raise sales tax demand against these big retailers (Tier-1), who are still not integrated with the FBR’s POS system.

The FBR’s directive said that upon filing of Sales Tax Return for the month of Feb, 2023 for all hereby notified T-lRs not having yet integrated, their input tax claim would be disallowed, without any further notice or proceedings, creating tax demand by the same amount.

Unregistered Tier-1 retailers asked to integrate with POS

The FBR’s STGO revealed that the said big retailers are required to be integrated with the Board’s POS system. The list of 100 identified retailers revealed that 96 big retailers are not registered with the sales tax department for the purpose of the POS and they are also not depositing collected sales tax from consumers into the national exchequer. Last month, the FBR had issued a list of 124 big retailers (Tier-1), which are required to be integrated with the FBR’s POS system and were denied 60 percent input tax credit in case of non-integration. The number of big retailers (Tier-1) now stood at 100, out of which 96 are required to be integrated with the POS system.

The Finance Act, 2019 added sub-section (6) to section 8B of the Sales Tax Act, 1990 (the STA, 1990), whereby, a Tier-l Retailer “(T-1R)” 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 per cent vide Finance Act, 2021.

In order to operationalise this important provision of law, a system-based approach has been adopted, whereby, all Tiers 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 I of 2022 issued on 3rd August 2021.

Copyright Business Recorder, 2023