The Federal Board of Revenue (FBR) has warned 81 unregistered retailers (Tier-1) to integrate themselves with the FBR’s Point of Sale (POS) system by January 10, 2023, to avoid denial of the input tax credit.
In this connection, the FBR issued Sales Tax General Order (STGO) 6 of 2023 on Tuesday.
The FBR’s STGO stated that the Tier-I retailers are required to be integrated with the Board’s POS system. The list of 81 identified retailers revealed that the big retailers are not registered with the sales tax department for the purpose of the POS and they are also not depositing collected sales tax from consumers into the national exchequer.
Last month, the FBR issued a list of 89 big retailers (Tier-1), which are required to be integrated with the FBR’s POS system and were denied a 60 percent input tax credit in case of non-integration. The number of big retailers (Tier-1) now stood at 81, 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 January 10, 2023.
Upon the filing of the sales tax return for the month of December 2022 for all hereby notified Tier-I retailers not having integrated, their input tax claim would be disallowed, the FBR procedure said.
The Finance Act, 2019 added sub-section (6) to section 8B of the Sales Tax Act, 1990 (“the STA, 1990”), whereby, a Tier-l 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 percent.
The figure of 15 percent has been raised to 60 percent through 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 3rd August 2021, the FBR’s notification added.