ISLAMABAD, July 5, 2023 – The Federal Board of Revenue (FBR) has issued a directive mandating the online integration of businesses located in eight major cities across Pakistan under the income tax laws. This measure is part of the FBR’s ongoing efforts to improve tax compliance and streamline revenue collection.
The FBR issued SRO 779(I)/2020 to amend the Income Tax Rules, 2002, requiring businesses in Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Multan, Peshawar, and Gujranwala to integrate their outlets to share online details of transactions. This FBR integration aims to ensure greater transparency and accuracy in reporting business transactions, thereby enhancing the efficiency of the tax system.
According to the FBR, the businesses required to integrate are as follows:
1. Restaurants
2. Hotels, motels, guest houses, marriage halls, marquees, clubs (including race clubs)
3. Inter-city travel by road
4. Courier services and cargo services
5. Services provided for personal care by beauty parlors, clinics and slimming clinics, body massage centers; pedicure centers, including cosmetic and plastic surgery by such parlors/clinics
6. Medical practitioners and consultants
7. Pathological laboratories, medical diagnostic laboratories including X-rays, CT Scan, MR Imaging, etc.
8. Hospitals or medical care centers providing medical consultants, hospitalization or other ancillary services
9. Health clubs, gyms, physical fitness centers, and body or sauna massage centers
10. Photographers
11. Accountants
12. Retailers, including manufacturer-cum-retailer, wholesaler-cum-retailer, importer-cum-retailer, or such other person who combines the activity of retail sale with another business activity
The directive of the FBR is aimed at broadening the tax base and curbing tax evasion by ensuring that all significant transactions are reported accurately. By mandating online integration, the FBR intends to create a seamless flow of information, reducing the chances of underreporting and ensuring that all taxable activities are duly recorded.
This FBR move is expected to bring substantial changes in how businesses operate, particularly in the targeted cities. Business owners will need to ensure their systems are capable of real-time reporting and that their staff is adequately trained to handle the new requirements. The FBR has indicated that this integration is crucial for improving the overall tax infrastructure and making the process more transparent and efficient.
Businesses that fail to comply with the new integration requirements may face penalties, further emphasizing the importance of adhering to these regulations. The FBR has also assured that it will provide the necessary support and guidance to businesses during the transition to ensure smooth implementation.
In conclusion, the FBR’s mandate for online integration under income tax laws represents a significant step towards enhancing tax compliance and transparency in Pakistan’s major cities. This initiative is expected to streamline the reporting process, reduce tax evasion, and ultimately increase revenue collection, contributing to the country’s economic stability.
