Karachi, September 22, 2024 – The Sindh Revenue Board (SRB) has initiated unannounced inspections of restaurants and cafes across Karachi to scrutinize their compliance with tax regulations, particularly the deduction and collection of Sindh Sales Tax (SST) on services.
The inspections were conducted in response to consumer complaints and rising concerns on social media regarding non-compliance with the Sindh Sales Tax on Services Act, 2011.
The SRB issued a statement on Sunday detailing the operation, which took place on September 21, 2024, in areas such as Sehar Commercial and Khayaban-e-Sehar in Defence Housing Authority (DHA). The purpose of these surprise visits was to ensure that restaurants were adhering to legal requirements, including issuing proper tax invoices and integrating their Point of Sale (POS) systems with SRB’s digital infrastructure.
The SRB emphasized that restaurants and cafes must comply with the SST rates specified in its circular dated June 30, 2024. According to the guidelines, a 15% sales tax applies to cash transactions for restaurant services, while a reduced rate of 8% is applicable to digital payments made through debit cards, credit cards, mobile wallets, or QR code scanning. Exceptions to this reduced rate exist in cases where the SRB has permitted a 15% tax even on digital payments.
During these inspections, SRB officials verified whether businesses had properly integrated their POS systems with SRB’s online system and were applying the correct SST rates. The board issued a stern warning that any business found underreporting sales, failing to apply the prescribed SST rates, or avoiding proper integration with the SRB system would face strict legal action. The SRB reiterated its commitment to enforcing tax compliance and protecting the government’s revenue stream from evasion.
Additionally, the SRB has assured the public that such surprise inspections will continue in the future to ensure widespread compliance. Restaurants and cafes that attempt to evade taxes or fail to adhere to the correct procedures will face significant penalties.
The statement further stressed that the SRB is committed to resolving taxpayer complaints promptly. Any establishment found attempting to circumvent tax obligations will be held accountable, ensuring that no business can exploit loopholes to avoid legitimate tax contributions. The SRB’s efforts aim to create a fair and transparent tax environment, strengthening the government’s fiscal position and ensuring the smooth functioning of public services.
These proactive measures reflect the SRB’s ongoing commitment to maintaining tax integrity across the province, particularly in the restaurant and hospitality sectors.
