FTO Directs FBR to Remove Shortcomings in Point of Sale Regime

Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to enforce effective monitoring and enforcement mechanism to resolve all the loopholes in the point of sale (POS) regime.

FTO’s recommendations were made while conducting a complaint lodged against FBR’s negligence and inefficiency in the POS system.

The complainant pointed out a few post-paid tax transaction receipts which were not verified. Besides, in POS, the tax was being charged on eatables despite them being non-scheduled items as per the price control Act 1977, the complainant further stated, adding that not only the tax was illegally being charged, but it was also not being paid into the national exchequer. The complainant believed that it was the prime responsibility of FBR to plug loopholes in tax collection.

The hearing was attended by Chief POS FBR, Chairman Pakistan Revenue Automation Limited (PRAL), Second Secretary IT, FBR, and the complainant.

The representatives of FBR and PRAL stated that system up-gradation is an ongoing process that PRAL is already doing. Its enforcement is the responsibility of field formations, which need to be more vigilant. It was also informed that the points raised by the complainant regarding the post-paid v.s. the prepaid tax system is a policy issue and cannot be commented upon by FBR.

It has been observed that after putting in place a system of post-paid tax, by PRAL, FBR could not train and motivate its field officers to monitor and enforce the system effectively. FBR’s statement that procedure for Tier–1 retailers had been introduced, without reporting incidents of enforcement of such rules, was mere eye wash, FTO observed. Mere installation of a system or rolling out defective software was not enough unless effective and efficient monitoring and enforcement follow-up was not put into practice. FBR’s negligence in enforcing the PSO system was thus obvious.

FTO further directed FBR to evolve an efficient mechanism in the POS regime, and a list of credible authorized vendors for the installation of software should be published.

He also recommended that all Chief Commissioners must ensure that the registered and functional QR code must be visible in all the invoices and directed I&II-R to trace and proceed against Tier-1 Retailers who were found involved in tax evasion through non-issuance of verifiable tax invoices.