KARACHI: Regional Tax Office (RTO) – II, Karachi on Saturday sealed a shop of electronics goods for failure to mandatory integrate with online system.
RTO – II, Karachi, an arm of the FBR, while continuing its crackdown against non-compliant Tier-1 retailers, sealed the business premises of M/s. Rafi Electronics located at Gulshan e Iqbal, Karachi.
The tax authorities also imposed an amount of Rs500,000 as penalty for non-compliance.
According to officials at Zone-III, RTO-II, Karachi said that the tax office had already passed an order on January 01, 2022 against the Tier-1 retailer for mandatory integration. Further, the penalty amount of Rs500,000 was also imposed for non-compliance.
“The retailer despite receiving the order has failed to install Point of Sale (POS) and integrate the unit till the sealing of the unit,” an official said.
All the Tier-1 retailers are required to integrate with the FBR under Section 33 of the Sales Tax Act, 1990. The RTO-II had warned the Tier-1 retailer that in case it failed to integrate in the manner as required under the Sales Tax Act, 1990 and the rules made thereunder, the business premises will be sealed.
Under the Sales tax Act. 1990: it is an offence: “A person required to integrate his business as integrated under sub-section (9A) of Section 3, who fails to get himself registered under the Act, and if integrated, fails to integrate in the manner as required under the law and rules made thereunder.”
The penalties for the offence are included as:
(i) penalty of five hundred thousand rupees for first default;
(ii) penalty of one million rupees for second default after fifteen days of order for first default;
(iii) penalty of two million rupees for third default after fifteen days of order for second default;
(iv) penalty of three million rupees for fourth default after fifteen days of order for third default:
Notwithstanding above, the business premises of such person shall be liable to be sealed by an officer of Inland Revenue in the manner prescribed.
Provided that if the retailer integrates his business with the Board’s Computerized System before imposition of penalty for second default, penalty for first default shall be waived by the Commissioner.
KARACHI: Karachi Tax Bar Association (KTBA) has raised the issue that taxpayers are unable to file sales tax return for the month of March 2022 as online system is denying taxpayers without payment of POS service fee.
The KTBA in a letter sent to FBR chairman on Wednesday urged to take urgent note of the matter and extend the date for filing sales tax return for the tax period March 2022. Further, allow a mechanism to upload the evidence of POS service already paid to enable them to file the Sales Tax Return for March 2022.
Through its SRO 1279/(I)/2021 dated 30 September 2021, the FBR levied Point of Sale (POS) service fee of Re1 (one rupee) per invoice on all invoices raised through POS integrated with Board’s computerized system.
It also specified that the above amount collected by the Tier-1 retailers from the customers shall be deposited along with the monthly sales tax returns (STR) in a designated bank account.
However, even before such levy was introduced through the above SRO, the Board vide S.R.O.1006(I)/2021 dated August 9, 2021 had already issued a standardized format for issuance of invoices by Tier-1 retailers through POS.
The above format provided for separate line/row for collection of the POS service fee.
Further a procedure for operationalization of SRO 1006(1)/2021 dated 9th August 2021” was issued carrying the following directions:
“2. The POS Service Fee of Re1 per invoice shall be collected by T-1Rs from the customers and shall be deposited along with the monthly Sales Tax return which is being amended to include a row for “POS Service Fee”. This row shall be auto populated by the system based on the invoices generated and recorded at the Board’s computerized system. The POS Service Fee collected each month shall be deposited by the T-1 Retailer in a separate head of Account.”
Subsequently, the taxpayers were intimated through IRIS of the following designated Bank Account for the purpose of deposit of POS service fee charged by them –
Account Title: IRS Common Pool Fund
Account No: PK76ABPA0010002165980013
Bank Name: Allied Bank Limited
Branch Name and Address: Allied Bank Plaza, Blue Area, Jinnah Avenue Islamabad
“Applicability of POS service fee on invoices issued from 01 October 2021
As explained above, since the above service fee was levied through S.R.O.1279/(I)/2021 dated 30 September 2021, we understand that the chargeability of POS service fee is applicable with effect from 01 October 2021.
However, we have been informed by our members that notices are being issued to the taxpayers requiring them to make payment of the POS service fee from August 2021 based on SRO 1006 referred above.
We, therefore, request your office to kindly take notice of the above matter and direct the field offices not to issue notices and demand the T-1 Retailors to deposit the POS service fee in relation to periods prior to October 2021.”
“Adjustment of POS service fee in the STR
As discussed above, the Board directed the T-1 Retailors to collect POS service fee and deposit the same in the designated bank account notified by it. However, the T-1 Retailors are unable to file the Sales Tax Returns (STR) for the tax period March 2022 due to the reasons that IRIS has placed an objection to pay the POS Fee from the date of integration irrespective of the fact that the same has already been deposited in the designated bank account / its applicability from October 2021. Further, the IRIS is not permitting the return to be submitted unless the newly designed payment challan is paid by the taxpayers.”
ISLAMABAD: The Federal Board of Revenue (FBR) on Friday conducted fourth draw of invoices issued through Point of Sales (POS) and announced prize winners.
According to the computerized balloting, the bumper prize of Rs1,000,000 has been awarded to Muhammad Ali on the invoice issued by Carefour.
The FBR announced winners of two second prizes of Rs500,000 each to Syed Tahir Ali Rizvi on the invoice issued by Shan Super Market and Hussain Raza Bhatti on the invoice issued by Jalal Sons.
Similarly, the four winners of third prize amounting Rs250,000 each are Abdul Waheed Shaikh, Mishal Zohaib, Sher Allam Khan and Mansoor Mehmood.
The FBR conduct computerized balloting of invoices issued by Tier-1 retailers on every 15th day of a month. This was fourth draw as it was started in January 15, 2022.
The FBR encouraged people to actively participate in the balloting to win prizes after buying from POS integrated retailers.
The FBR previously issued a procedure for participating in the prize scheme.
The revenue body said that the customers of the integrated tier-1 retailers, whose names and CNICs are notified through random computerized draw shall be entitled to prizes in respect of their purchases from the integrated tier-1 retailers.
The customers shall verify the electronically generated invoice of integrated retailers either through the “tax asaan” application or by sending SMS to number 9966.
The application shall notify the customer regarding the status of the invoice either as “verified” or “unverified”.
In case of a verified invoice, the customer shall furnish one time, the following detail to the online system, namely:- Name; CNIC; and Mobile number.
Names and CNICs of the customers shall be included in the random computerized draw upon fulfillment of the requirement.
In case of an unverified invoice, the customer shall report the same through the system. The Board shall conduct inquiry and take appropriate action under the relevant provisions of law.
The computerized draw for the prizes shall be held in the first week of every month at the FBR Headquarters and the invoices of the immediately preceding month shall be entered in the draw.
Draw winners shall be required to perform biometric verification, at the nearest e-sahulat facility of NADRA and submit a scanned copy on the “tax assan” application. After successful biometric verification, winners shall be required to provide their IBAN through a “tax asaan” application.
The total prize money and the denomination of the prizes shall be decided on month to month basis by the Board.
ISLAMABAD: The Federal Board of Revenue (FBR) has explained cash discount related to invoices issued through Point of Sale (POS) by Tier-1 retailers.
The FBR explained through an official note dated March 17, 2022 that cash discount has been allowed in the form of reduction of prices in seasonal sales / sales and the consideration in money is received after cash discount has been allowed.
It is clarified that the value of supply for sales tax purpose is the actual value received in monetary terms excluding the amount of sales tax and not the gross value. “Hence, the sales tax will be calculated and charged on the actual or discounted price accordingly,” the FBR added.
The revenue body said that representations from the taxpayers and bar councils were received seeking further clarification of the ‘trade discount’.
It said that value of supply as per section 2 (46) of the Sales Tax Act, 1990 in respect of taxable supply means the consideration in money which the supplier receives from the recipient for that supply but excluding the amount of tax.
In the previous explanation dated October 13, 2021, the FBR clarified that the discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right.
“The captions such as total, sales tax, discount allowed appearing at the bottom of the invoice are standalone notations and do not necessarily add or subtract one another.”
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that trade discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right
The FBR on August 9, 2021 issued SRO 1006(I)/2021 and specified standardized format for sales tax invoice detailing minimum requirement for the integrated point of sale (POS) system.
The definition of trade discount as mentioned in the value of supply in sub-section (46) of Section 2 the Sales Tax Act, 1990 is meant for Business to Business transactions and does not cover retail sector and the business to consumer transaction.
The FBR said it had received various representations from the taxpayers and Bar Councils seeking clarification of the term ‘trade discount’ as stated in sub-section (46) of Section 2 of the Sales Tax Act, 1990 whether the term also covers ‘cash discount’ given by retailers to end consumers, for the purpose of depiction in the standardized Sales Tax invoice under SRO 1006(1)/2021 dated 09.08.2021.
The matter has been examined by the Board, it is clarified that the discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right.
The captions such as total, sales tax paid, discount allowed appearing at the bottom of the invoice are standalone notations and do not necessarily add or subtract one another.
KARACHI: Officials of Large Taxpayers Office (LTO) Karachi have apprised the business community that installation of Point of Sale (POS) offered reduced rate of sales tax.
A team of tax officials from Large Tax Office (LTO) Karachi visited Pakistan Business Council (PBC) on Wednesday to discuss the integration of Tier-1 retailers, a statement said on Wednesday.
The purpose of the visit was to listen and redress the grievances regarding the online integration of Tier-1 retailers / Point of Sale (POS) with the FBR system.
It was apprised to the members that the POS integration of retailers does not involve new tax, rather it gives the benefit of reduced rate of sales tax to consumers who buy the goods from integrated Tier-1 retailers.
The LTO Karachi team was comprised of officers included: Shakeel Ahmad Kasana, Commissioner-Inland Revenue (IR); Aijaz Hussain, Additional Commissioner-IR; Shoukat Ali Changezi, Additional Commissioner-IR; Abdul Hameed Mangrio Deputy Commissioner-IR; and Amjad Ali Moroojo, Audit Officer-IR.
The representatives of the PBC were: Ehsan A. Malik, Chief Executive; Samir S. Amir, Director Research; and Aman Chanchi, Unilever Pakistan.
The Commissioner-IR briefed the members regarding the scope and purpose of POS integration.
A formal presentation was given by Abdul Hameed Mangrio, Deputy Commissioner which was followed by Q&A session.
The delegation requested the members to encourage the Tier-1 retailers to get integrated with the FBR system for ease of reporting of sales and avoid unnecessary documentation besides enjoying reduced rates of tax on their supplies.
The members of the Council appreciated the outreach efforts of FBR to remove the misconception and misgivings regarding the online integration of retailers with the FBR system.
They appreciated the system and informed that Pakistan Business Council is always encouraged to promote documentation of the economy and Point of Sale (POS) is the right step in this direction.
They also assured their active engagement for making the Point of Sale (POS) integration a success story for the larger interest of the country and the documentation of the economy.
The FBR said that through Finance Act, 2019 added a sub-section (6) to Section 8B of the Sales Tax Act, 1990 whereby a Tier-1 Retailer who did not integrate its retail outlet in the manner prescribed under sub-section (9A) of Section 3 of the Sales Tax Act, 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 through Finance Act, 2021.
In order to operationalize the provision of law, a system-based approach has been adopted whereby all Tier-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.01 of 2022 issued on August 03, 2021.
Through the latest STGO, a list of 1,136 identified Tier-1 Retailers has been placed on FBR’s portal allowing them to integrate with FBR’s system by October 10, 2021 and the procedure of exclusion from this list of 1,136 identified Tier-1 retailers shall apply as laid down in STGO 01 of 2022 dated August 03, 2021.
Upon filing of sales tax return for the month of September 2021 all notified Tier-1 retailers not having yet integrated, the input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount.
KTBA President Muhammad Zeeshan Merchant said that the ongoing enforcement for the installation of POS would result in resistance as retailers were not aware whether they were liable to integrate or not under the law.
The KTBA President highlighted the problems of lack of information regarding POS installation at a meeting with a team of officers from the Large Taxpayers Office (LTO) Karachi.
Zeeshan Merchant reiterated that the KTBA fully supports the FBRs stance on POS, being a noble cause for the documentation of the economy and further explained the problems faced by the businessmen in the implementation of POS.
Merchant said that the STGOs of Tier-1 Retailers issued by the FBR in the case of small traders is unjustified wherein even small shop holders are also included and the FBR has only fixed the criteria of turnover to implementing the POS.
FBR needs to launch a large-scale campaign for educating Tier-1 Retailers and the general masses regarding the usefulness of bringing Tier-1 Retailers on POS. In this regard, the president of KTBA has given the following suggestions:
— A unified comittee to the extent of all field offices within Karachi must be constituted to discuss POS issues and solutions at one forum. Discussion on weekly basis must be encouraged and business representatives may also be invited in this forum.
— Joint seminars having officers from FBR, members of KTBA and representatives of various business organizations must be arranged to address the issues and fears of the business committee being faced in the implementation of POS. This would vanish the resistance and pave a long way for POS. ADCR must be kept active to resolve issues like POS. This would be a harbinger of success, provided there is a positive approach all around.
— FBR should take penal actions only to the extent of clear cases falling in the definition of Tier-1 Retailers.
— Retailers are the affected ones for the reason that manufacturers hesitate giving invoices for their purchases, whereas wholesalers and distributors are found nowhere in this chain of POS. If there is no input tax available to them then how would they pay the output tax.
— To implement POS, media campaign in the form of electronic media, social media, affixing of flyers at common places must be ensured to create awareness among the masses.
— Reasonable time of four months must be given for implementation of POS to the business committee.
— One of the fears of the POS liable retailers is that their sale will reach climax due to the implementation of POS and the department would take action against them for the previous five years as well. FBR has to take a policy decisions in this regard to address their genuine fear as to implement POS, the government has to look forward and not backward to move on in the right direction.
— Service sector needs to be addressed as SRB is also pursuing integration on POS. The retailers, restaurants are therefore in confusion about whom to report in this regard.
— SRO 779(1)/2020 dated 26.08.2020 needs a Tier-1 Retailer to be a registered person with Sales Tax meaning thereby a taxpayer has to get itself registered in Sales Tax first to implement SRO 779(1)/2020.
— POS-related expenses are one of the concerns of the small traders.
— Companies providing POS machines licensed by the Board are creating issues for the retailers. Government / FBR run POS machines must be provided to avoid such issues.
— It was also suggested that those who are integrated POS should automatically be excluded from the purview of section 8B of the Sales Tax Act, 1990 as prescribed vide SRO 344(I)/2020 dated 29.04.2020.
— Taxpayers using debit / credit card machines in the past were encouraged to use to bring the economy under documentation and now the same channel is being used to bring them under Tier-1 Retailers by bringing them in the definition of Tier-1 Retailer. This creates agony among the already documented sector and businessmen are now trying to stop using this important tool of documentation anymore.
— Department must show grace in granting extension in the filing of Sales Tax Return of those taxpayers who have been integrated with POS and are now facing problem in their filing of ST return.
— In order to achieve success in the POS implementation exercise, sector-wise profiling is recommended including plastic, paper and steel sectors by virtue of which big distributors and wholesalers would come under control thereby reducing the burden on other tiers of the economy.
— In the last, the success of POS exercise depends upon efficient control on manufacturers and importers.
The meeting was conducted at LTO, Karachi and attended by: Nisar Ahmed Burki, Additional Commissioner Inland Revenue; Mukhtiar Ahmed Shar, Additional Commissioner Inland Revenue; Anees Ahmed Memon, Deputy Commissioner Inland Revenue; Khush Ahmed Din, Senior Auditor.
Besides KTBA President Muhammad Zeeshan Merchant, the other members were also at the meeting, who are included: SyedFaiq Raza, General Secretary; Mehmood Bikiya, Vice President; HarisTufail, Joint Secretary; Shiraz Khan, Librarian; and Irfan Ghafoor, Member Admin.
ISLAMABAD: Federal Board of Revenue (FBR) on Friday imposed service charges on invoices issued through Point of Sales (POS) that are integrated with the FBR system.
KARACHI: The Federal Board of Revenue (FBR) has initiated action against big retailers by posting tax officials at business premises for monitoring of sales.
Corporate Tax Office (CTO) Karachi, an arm of the FBR, has posted its staff at eight outlets of a big retailer for checking sales, purchase and production of saleable goods.
The tax office posted its staff at eight outlets of Clifton Nimco Private limited under Section 40B of the Sales Tax Act, 1990.
Sources said that it was major step taken by the tax authorities to check tax evasion at retail level.
They said that the step was taken on the directives of Dr. Aftab Imam, chief commissioner inland revenue in order to assure the retail unit is making true declaration of its sales.
The tax office also enforced sales tax rules to install point of sale (POS) at the outlet, which is mandatory for big retailers.
Installing POS machine is mandatory for all retailers falling under category of Tier-1 retailers.
One of the major changes brought through the Finance Act, 2021 that all those outlets accepting debit and credit cards are required to integrate their sales with the FBR.
The sources said that the team of the tax officials would depute till gathering of require information to ascertain the sales and income of the outlet.
