ISLAMABAD: Federal Board of Revenue (FBR) is likely to further extend the deadline for big retailers to digitally integrate their trade transactions with real-time point of sale system of the tax authority.
The last date for integration of point of sale (POS) with FBR’s online system was already extended up to March 31, 2020. However, lockdowns in many parts of the country due to outbreak of coronavirus adversely impacted the economic activities. Previously, the FBR had set December 15, 2019 as deadline for tier-1 retailers to register and link their sales/purchases with the FBR system.
Under the Sales Tax Act, 1990 all retailers falling under category of tier-1 are required to integrate their outlets with the FBR’s online system for monitoring of sales and purchases.
The tier-1 retailers include those operating as units of a national or international chain of stores, in an air-conditioned shopping mall, plaza or centre, excluding kiosks, whose cumulative electricity bill during the immediately preceding 12 consecutive months exceed Rs1.2 million or those engaged in bulk import and supply of consumer goods on wholesale basis to retailers and consumers. Besides, a retailer is also categorised as tier-1 if his shop measures 1,000 feet in area or more.
The concept of POS integration was introduced in order to conduct online monitoring of sales by the retailers and to check sales tax evasion. So far the FBR managed to bring many big retailers under this integration drive. However, many retailers falling under the definition are still reluctant to connect their outlets with the FBR.
The FBR has already warned to take harsh action against individuals who avoid linking their system with the FBR despite having the prescribed setup. Under the tax laws, if a retailer refuses to comply with the legal requirement, then such retailer would face a penalty of up to Rs500,000 or 200 percent of the tax amount involved, whichever is higher. Such retailer might also to be sentenced to imprisonment which may be extended to two years. A number of retailers installed the required infrastructure for linking their sales with the online system, while retailers having low turnover but operating in malls were resisting compliance to the FBR’s requirements.
Atiq Mir, chairman of Karachi Tajir Ittehad said the tax officials were harassing them and taking advantage of the tax laws. Mir said a retailer operating an air-conditioned shopping mall located in posh area would have a different turnover compared with the one operating elsewhere. “The FBR-constituted market committees comprising tax officials and representative of market associations have already failed to reach an agreement in this regard,” he said in January. “Until definitions in the laws are not changed the registration goals would not be achieved.”