The Federal Board of Revenue (FBR) has amended the monthly sales tax return form to disallow 60 percent input tax credit to big retailers (Tier-1) who have failed to integrate their businesses with the FBR’s point of sales (POS) system.
The FBR has issued S.R.O. 407(1)/2022 to the Sales Tax Rules, 2006 for revision of the monthly sales tax and federal excise return form (STR-7).
The amendment in the sales tax return form would also allow the reversal of inadmissible input tax for the Tier-1 retailers after their integration with the FBR’s POS system. Thus, now the retailers, who get integrated with the FBR’s system, can legally claim the adjustment under the return form.
On the demand of the business and trade, the FBR has given legal cover to the reversal of the decision of the disallowance of 60 percent input tax credit to big retailers (Tier-1). In order to implement the decision, the FBR has added two new columns, viz. 6B and 6C in the sales tax return form. Under column 6B, inadmissible input tax has been incorporated in terms of section 8B of the Sales Tax Act. Under column 6C, there is a provision of the reversal of inadmissible input tax. Subject to exclusion as provided under sub-para (II) & (III) of para 2 of the sales tax general order (STGO) No. 1/2022.
The FBR had issued a list of 1,358 big retailers (Tier-1), who are required to be integrated with the FBR’s POS system and would be denied 60 percent input tax credit in case of non-integration by February 10, 2022.
The board has decided to raise sales tax demand against these big retailers (Tier-1), who are still not integrated with the FBR’s POS system by the deadline of February 10, 2022. According to the FBR, in order to operationalize this important provision of law, a system-based approach has been adopted.
