The Federal Board of Revenue (FBR) has directed 482 big (Tier-1) retailers to immediately integrate with FBR’s point of sale (POS) system by 10 December 2021 to avoid disallowance of input tax claims and creation of tax demands.

In this regard, FBR issued Sales Tax General Order No.6 of 2021 here on Friday.

According to the FBR’s circular, the Finance Act, 2019 added sub-section (6) to section 811 of the Sales Tax Act, 1990 (“the STA, 1990”) whereby a Tier-1 Retailer “(T-1 IR)” 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 Finance Act, 2021.

In order to operationalize this provision of law, a system-based approach has been adopted whereby all T-1 retailers 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. 1 of 2022 issued on 3"d August 2021.

FBR has placed a list of 482 identified T-1 retailers on its web portal: www.fbr.gov.pk allowing the retailers to integrate with FBR’s system by 10 December 2021. FBR says that the procedure of exclusion from this list will apply as laid down in Para 2 of STGO 1 of 2022 dated 3 August 2021. And, upon the filing of Sales Tax Return for November 2021 for all notified T-1 retailers, their input tax claim would be disallowed without any further notice or proceedings, creating tax demand by the same amount.

Source: Pro Pakistani