LCCI writes to FBR for amendment to SRO 1842(1)

LAHORE:In a bid to address the concerns raised by members of the Lahore Chamber of Commerce & Industry, (LCCI) President Kashif Anwar has penned a letter to Chairman Federal Board of Revenue, Malik Amjed Zubair Tiwana, urging for amendments to SRO 1842(1)2023 dated 21-12-2023.

The focal point of contention revolves around a recent notification amending 150ZEA of the sales tax rules, 2006, specifically targeting Tier-1 retailers under section 2(43A) (g) of the sales tax act, 1990.

Under the revised rule, retailers with a deductible withholding tax under section 236H of the Income Tax Ordinance 2001 exceeding Rs100,000/- in the last 12 months are now obligated to integrate with the point of sale (POS) system. Kashif Anwar pointed out that this amendment would affect retailers across 21 different sectors/products, citing their lack of expertise, technical know-how, and financial resources.

The crux of the matter lies in the additional burdens the places on retailers. He said that in the previous budget, the condition of 1,000sq-ft was withdrawn because of the hard work of the business community and now this 236H has been imposed instead of enhancing the turnover of retailers and reducing the tax rate by facilitating more and more unregistered persons to come into tax net.

President LCCI highlighted that compliance with the new regulations would necessitate hiring professional accountants for record maintenance, filing statements, reporting to the Federal Board of Revenue (FBR). Moreover, the installation of POS systems would further escalate costs for these already economically challenged retailers.

He said that it was not feasible to come into sales tax regime overnight as this would create problems for withholding retailers. He noted that this could negatively impact those who are already tax-compliant and documented, potentially discouraging the documented sector, and these overnight changes may result in refraining the unregistered retailers to come into the tax net.

The LCCI President expressed deep concern over the potential ramifications, asserting that these burdens could lead to severe challenges for retailers. Compliance difficulties may result in penalties, exacerbating their financial strain. He stressed the urgency of the matter, calling for immediate intervention by FBR chairman to address the predicament.

He proposed a concrete solution in his letter. He urged FBR chairman to consider amending the SRO by substantially raising the prescribed threshold of deductible withholding tax for POS system integration. Specifically, he proposed an increase of deductible threshold from Rs100,000/- to Rs500,000/-. This adjustment would be a great favour to the retailers and will enable them to work smoothly. He said the outcome of this appeal could potentially shape the landscape for retailers, determining the ease of compliance with evolving tax regulations.