The Federal Board of Revenue (FBR) has notified a list of 85 unregistered big retailers who are required to be integrated with the FBR’s Point of Sale (POS) system by October 10, 2022. Big retailers are termed Tier-1 retailers in FBR legal language.
In this regard, the Authority issued Sales Tax General Order (STGO) 4 of 2022 on Friday.
According to the FBR’s notification, these 85 identified retailers are still operating outside of the documented regime and are not depositing collected sales tax from consumers into the national kitty.
Last month, the FBR issued a list of 81 big retailers (Tier-1), which were required to be integrated with the FBR’s POS system and were denied a 60 percent input tax credit in the case of non-integration. The number of big retailers (Tier-1) now stands at 85, which are required to be integrated with the POS system. 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 October 10, 2022.
The FBR has warned the retailers that upon the filing of the sales tax return for the month of October 2022 for all hereby notified Tier-I retailers not having integrated, their input tax claim would be disallowed.
The Finance Act, 2019 added sub-section (6) to section 8B of the Sales Tax Act, 1990 (“the STA, 1990”) whereby 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, its adjustable tax for that period would be reduced by 15%. The figure of 15% has been raised to 60% vide the Finance Act, 2021.
In order to operationalize this important provision of law, a system-based approach has been adopted whereby all T-IRs who are liable to integrate but have not yet integrated, with effect from July 2021 (Sales Tax Returns filed in August 2021) are to be dealt with as per the procedure laid down in STGO No. I of 2022, issued on August 3rd, 2021.
The procedure of exclusion from this list of identified Tier-I shall apply as laid down in STGO 17 of 2022 dated May 13, 2022, the FBR added.