ISLAMABAD: The Federal Board of Revenue (FBR) has directed 1,680 Tier-1 (big) retailers to integrate with the FBR’s point of sales (POS) system by May 31, 2024.

The FBR has issued a Sales Tax General Order (STGO) No. 01 of 2024 on Wednesday.

According to the FBR, the Finance Act, 2019 added sub-section (6) to section 8B of the Sales Tax Act, 1990 (STA, 1990) which provided that input tax of a Tier-1 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, would be reduced by 15%. The figure of 15% subsequently raised to 60 percent vide Finance Act, 2021.

Technical Release 4/2024: e-integration–Point of Sale (POS) system

In order to streamline the process of registration and integration of Tier-1 retailers, the FBR has issued S.R.O 1842(I)/2023, dated 21st December, 2023, whereby retailers, whose deductible withholding tax under section 236H of the Income Tax Ordinance, 2001 during immediately preceding twelve consecutive months has exceeded Rs. 100,000 have been prescribed as Tier-1 retailers under clause (g) of section 2(43A) of the Sales Tax Act, 1990. Such retailers are liable to be registered and integrated with Board’s computerized system for real-time reporting of sales under Sales Tax Act, 1990 and rules made there under.

The FBR has issued a new STGO for integration of such retailers who fulfill the conditions laid down in section 2(43A)(g). In order to operationalise this important provision of law, a system based approach has been adopted whereby all T-1Rs who are liable to integrate but have not yet integrated, wef, June-2024 (Sales Tax Returns filed in July, 2024) are to be dealt with as per the procedure.

(i); A list of 1,680 identified T-IRs, enclosed with this STGO has also been placed on the FBR’s web portal at www.fbr.gov.pk allowing them to integrate with the FBR’s POS System by May 31, 2024.

(ii); In case a notified T-1R claims that it is not a T-1R as per the definition provided in Section 2(43A) of the Sales Tax Act 1990, and therefore not liable to integrate, it shall apply to the Commissioner concerned for exclusion from the list, and the Commissioner would make a decision in this regard in accordance with the procedure laid down in STGO 17 of 2022, dated 13.05.2022.

(iii); Upon filing of Sales Tax Return for the month of June, 2024 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.—SOHAIL SARFRAZ

Copyright Business Recorder, 2024