The Lahore Chamber of Commerce and Industry (LCCI) President Kashif Anwar has urged the Federal Board of Revenue to revisit its recent ruling on obligating Tier-1 retailers to integrate with the point of sale (POS) system if their deductible withholding tax under section 236H of the Income Tax Ordinance 2001 exceeded Rs. 100,000 in the last 12 months.
In this regard, the LCCI President in a letter to Chairman FBR Malik Amjed Zubair Tiwana asked the tax machinery to amend SRO 1842(1)2023 dated 21 December 2023, warning that failure to do so would impact merchants in 21 various sectors/products who lack experience, technical know-how, and financial resources.
Anwar argued that the condition of 1,000 square feet was removed from the previous budget, but now 236H has been imposed instead of increasing retailer turnover and lowering the tax rate.
President LCCI said compliance with 236H requires the appointment of professional accountants for record keeping, submitting statements, and reporting to FBR. Meanwhile, the installation of POS would increase prices for the already financially challenged retailers.
He said implementing a sales tax structure overnight would cause complications and have a detrimental impact on those who are currently tax-compliant and documented, perhaps discouraging the documented sector, and that these sudden changes could further discourage unregistered retailers.
He said compliance issues may result in penalties and increase financial difficulties for struggling newcomers. He emphasized the importance of the situation, urging the FBR chairman to intervene immediately.
As a failsafe solution, he encouraged revising the SRO by increasing the deductible WHT threshold from Rs. 100,000 to Rs. 500,000 for POS system integration. According to the LCCI President, this would potentially change the retail landscape and effectively streamline compliance with evolving tax legislation.
