FTO orders FBR to suspend shop sealing, train field staff

LAHORE: In a major relief for Tier-I retailers across Pakistan, the Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to halt the sealing of shops and address critical technical issues plaguing the Point of Sale (POS) system.

Dr Asif Mahmood Jah, the FTO, issued a detailed ruling in favour of the formal retail sector following a complaint lodged by the Chainstore Association of Pakistan (CAP) through its legal counsel Advocate Ahmed Naseer. The complaint highlighted serious concerns, including POS system failures, high integration costs, profile disconnections, missing invoice uploads and poor coordination between the FBR and its automation arm PRAL.

The FTO instructed that no Tier-I retail outlets be sealed until all technical faults -- such as profile expiry issues leading to POS disconnections and automatic version changes -- are fully resolved. It further recommended that the FBR consult with CAP on future POS-related glitches and enforcement strategies to ensure mutual understanding and smoother compliance.

The ombudsman also noted a lack of technical training among the FBR’s field officers, which limits their ability to resolve systemic issues. Enhanced coordination with PRAL was advised to bridge this gap.

The FTO also directed the FBR to establish an advance warning system to alert Tier-I retailers of impending POS disconnections, token expiries or automatic shutdowns to avoid abrupt operational disruptions. It also recommended that POS security tokens should remain valid for a minimum of five years, with sufficient prior notice given before expiry.

A longstanding issue raised by retailers -- the absence of a bulk download feature in the POS system -- was acknowledged by the FBR, which has since submitted a change request form (CRF). The FTO urged swift implementation of this feature.

The ruling confirmed that invoices often fail to sync with FBR servers, with retailers receiving ‘fake disconnect’ errors despite their systems functioning normally. While the FBR attributed this to substandard third-party software, the FTO stressed the need for both technical and administrative solutions.

The complaint also revealed that some integrators charge as much as Rs10 per invoice or up to Rs1 million annually, creating a significant financial burden. In response, the FBR clarified that PRAL’s services as a Licensed Integrator would now be provided free of cost under SRO 69(I)/2025.

To ensure ongoing accountability and system improvement, the FTO advised the FBR to conduct quarterly meetings with key stakeholders, especially CAP, to monitor POS performance and resolve issues in real time.

This decision is expected to ease pressure on thousands of Tier-I retailers who voluntarily integrated with the FBR’s POS system but faced persistent technical challenges, financial losses, and undue enforcement actions. The FTO emphasised that resolving these issues is essential for strengthening tax compliance and advancing Pakistan’s retail documentation drive.