The retailers' operating under the turnover sales tax scheme or retail outlets/shops in commercial buildings without having centrally air-condition facility or not part of shopping plazas are not fully apprehending the new sales tax registration regime introduced through Finance Act, 2014.
It was learnt on Tuesday that the sales tax experts of Karachi have approached Federal Board of Revenue (FBR) to seek clarification on issues raised under the new sales tax regime for retailers. They have raised questions on recently introduced new two-tier sales tax regime for retailers by Federal Board of Revenue.
According to the details, the tax experts from Karachi have written a letter to the FBR seeking clarification from the FBR Member Policy Inland Revenue regarding sales tax regime for retailers introduced vide notification 689(I)/2014. Tax experts were of the view that by virtue of this scheme persons falling under five categories prescribed under rule 4 of the scheme are liable to operate under standard or applicable rate regime of sales tax. The persons other than these categories are however subject to sales tax payment at source through their electricity bills and do not requires to file sales tax returns. Tax experts have thoroughly gone through the regime and raised questions that require immediate response to understand it for educating the retailers for smooth operation of the scheme:
Query 1: The retailers who are already registered under turnover sales tax system and do not fall within the five categories provided under rule 4, are they not required to file sales tax return any more? Should they apply for de-registration under section 21 of the Sales Tax Act since they would be subjected to payment of sales tax at source through electricity bills without filing of sales tax returns and requirement to maintain and retain sales tax record?
Query 2: If a retailer outlet operates in a commercial building which is neither centrally air-conditioned nor a shipping plaza, which sales tax procedure is applicable to such retail shops? Tax experts further stated that if a wholesaler or registered retailer buys an item falling under the Third Schedule of the Sales Tax Act 1990 from a manufacturer after paying 19% GST, is this sales tax is his full and final discharge of sales tax liability and the said retailer would not be required to charge any further sales tax and will treat this item as exempt in the sales tax return to be filed.
Tax experts have asked the FBR to issue immediate clarification on this issue so that retailers be educated and informed accordingly. The queries have also been sent to Federation of Pakistan Chamber of Commerce and Industry for intimation and necessary assistance, sources informed.