The Federal Board of Revenue (FBR) has proposed a new optional regime of sales tax for tier-1 retailers by charging 2 percent sales tax of turnover without adjustment of input tax in the upcoming budget (2016-17). Sources told Business Recorder here on Saturday that the tier-1 retailers cover those retailers who are defined under rule 4 of the Sales Tax special procedure meant for retailers. It has been estimated to generate additional revenue through introduction of the new scheme sales tax for the said category of retailers.
Presently, tier-1 retailers are obliged to pay sales tax at standard rate and paying sales tax under normal regime. The proposal is under consideration to introduce optional regime of sales tax for tier-1 retailers by charging sales tax @ 2% of turnover without adjustment of input tax.
Presently, tier-1 retailers covers retailers 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 who has a credit or debit card machine; a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees six hundred thousand 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.
The retailers operating as a unit or a franchise or any other arrangement of a national or multinational chain of stores, shall obtain a separate registration distinct from their principal.
Tax experts said that the tier-1 retailers were introduced through SRO 608(i)/2014. The retailer under tier-1 has by and large did not accept application of standard rate and agitating against the scheme. The board has also failed to enforce standard rate and collection of sales tax from them. Therefore it is under serious consideration to introduce alternative proposal which maybe acceptable to the retailers, they added.