ISLAMABAD: The Federal Board of Revenue (FBR) has directed 81 unregistered retailers (Tier-1) to integrate them with the FBR’s Point of Sale (POS) system by January 10, 2023 to avoid denial to input tax credit.
The FBR has issued Sales Tax General Order (STGO) 6 of 2023 on Tuesday.
The input tax claim of the un-registered retailers would be disallowed without any further notice or proceedings, FBR warned retailers.
The FBR’s STGO revealed that the said big 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 had issued a list of 89 big retailers (Tier-1), which are required to be integrated with the FBR’s POS system and were denied 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 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 per cent.
The figure of 15 per cent has been raised to 60 per cent vide Finance Act, 2021. In order to operationalise this important provision of law, a system-based approach has been adopted, whereby, all Tiers 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 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.