This blog is written by Mr. Saif Uddin Khilji. Please read this blog and provide your valued comments.
In order to ensure correct reporting of sales by retailers and realization of due tax from them, FBR had prescribed electronic integration of points of sales (POSs) of all ‘Tier-1 retailers’.
The retailers don’t need to purchase any additional machinery to use this system, as they can integrate their system with POS by downloading an application from the FBR website.
In terms of Section 2, sub-section (43A) of Sales Tax Act, 1990, a Tier-1 Retailer means a retailer falling in any one or more of the following categories, namely:–
- a retailer operating as a unit of a national or international chain of stores;
- a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
- a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;
- a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”;
- a retailer, whose shop measures one thousand square feet in area or more; and
- any other person or class of persons as prescribed by the Board.
Effective December 15, 2019, it is mandatory for all Tier-1 retailers to integrate their retail outlets with Board’s computerized system for real-time reporting of sales.
Provided that the customers of a Tier-1 retailer shall be entitled to receive cash back of up to five percent of the tax involved;
In case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by 15%.
Under section 33 of the Sales Tax Act, 1990, as amended by Tax Laws (Second Amendment) Ordinance, 2019, specific penalty has been provided for retailers failing to integrate. Under the newly added clause 25 in the Table in section 33, a tier-1 retailer failing to integrate shall be liable to penalty of Rs. 1 million, and in the event of continuing failure may face sealing of his premises and embargo on his sales.
Some important Rules from CHAPTER XIV-AA of THE SALES TAX RULES, 2006 are discussed below:
- No sale or supply from the notified outlets shall be made without being recorded by the duly accredited electronic fiscal device (EFD), which means a system composed of one Sale Data Controller (SDC) and at least one Point of Sale (POS) connected together;
- In case of sale returns or exchange, a proper credit note or supplementary invoice with prescribed particulars shall be issued containing the reference of original invoice and the detail of amount refunded or additionally charged, along with sales tax involved;
- All the sales and transactions made from the notified outlet shall be communicated to the Board’s Computerized System through EFD and the sales data so transferred shall be accommodated in Annex-C or other relevant Annex of the monthly sales tax-cum-federal excise return;
- The integrated supplier must have the facility of debit and credit card machine installed at each notified outlet and the sales through debit or credit cards shall not be ordinarily refused;
- The transactions on each point of sales in the notified outlet shall be recorded by a CCTV camera and the recording thereof shall be retained for a period of at least one month. Such recordings shall be provided to the Commissioner concerned as and when demanded and for the time as specified;
- The integrated supplier shall prominently display on each outlet a signboard bearing FBR’s official logo along with the text “Integrated with FBR” and also the registration number of each POS verifiable through the Board’s verification services;
- The benefit of lower rate under this rule shall not be available after the expiry of one month after the Board conveys readiness for provisions of rule 150ZEB as provided in sub-rule (2);
Bakeries and sweetmeat shops, selling goods to general public are also retailers. Therefore, such bakeries and sweetmeat shops, whether or not manufacturers also, shall be treated as tier-1 retailer if they fall in the definition of tier-1 retailer as in clause (43A) of section 2 and they shall be accordingly required to integrate their POS.
Furthermore, it is mandatory for all restaurants to integrate their POSs. Chapter XIV-A of the Sales Tax Rules, 2006 pertains to restaurants, snack bars, cafes etc. All such establishments, whether or not falling in category of tier-1 retailers, are required to integrate their POSs under the said Chapter.
POS Software Vendor’s list is available on FBR’s Website and the retailers may approach and engage any of them or any other vendor of their choice that they find suitable after due diligence.
So far 5,783 POSs of 286 retailers have been integrated with FBR and the sales tax invoices issued by these POSs are being reported to FBR in real-time,” said an FBR statement adding that progress had been made possible with the continuous effort of the board and its field formations.
Saif Uddin Khilji