FBR issues procedure for textile, leather sectors to avail reduced tax rate

KARACHI: The Federal Board of Revenue (FBR) has issued procedure for the textile and leather sectors to avail reduced sales tax rate by integrating their supplies with an online system.

The FBR issued SRO 1360(I)/2018 to amend Sales Tax Rules, 2006 for allowing sales tax rate at six percent for textile and leather sectors, with a condition that all point of sales of a unit should be connected with the FBR’s online system.

The FBR said it would notify integrated units and their outlets form where the units intended to sell the goods and avail reduced rate of sales tax.

The tax body said the facility would be available subject to certain terms and conditions. In case of failure, the FBR would recover sales tax rate at nine percent as specified in SRO 1125(I)/2011 dated December 31, 2011.

Officials in the FBR said this integrated system would provide complete information of sales from each point of sales (POS) of a unit through online generation of sales invoices.

They said FBR would also able to obtain information of buyers to verify in case of refunds and input/output adjustments.

The Federal Board of Revenue said the persons intending to avail the integrated system should have the facility of debit and credit card machine installed at each outlet, and the sales through debit and credit cards should not be ordinarily refused.

“The taxpayers availing this facility are required to provide details of debit and credit transactions to concerned commissioner of Inland Revenue,” an official said.

To avoid misuse of the facility, the FBR made it mandatory for integrated POS to have CCTV camera.

Further, the recording of such camera should be retained for at least three months and provided to the concerned commissioner.

To avoid misuse, the Federal Board of Revenue has also strong audit mechanism to check sales invoices.

The FBR said integrated supplier should upload or transfer the data of all invoices or debit and credit notes periodically to the FBR’s computerised system, but the interval during such transfer should not exceed seven clear days in any case.

“The failure to do so shall deprive him of the status of integrated supplier and of the entitlement to supply goods at reduced rate,” the FBR added.

It further said the integrated supplier, who is found to have tampered with the system or made sales otherwise than the prescribed devices or who contravenes any of the provisions, should no more be eligible for the reduced rate and an appealable order to this effect should be made by the officer in-charge of the unit after giving an opportunity of being heard, besides any penal or recovery action that might be taken under the sales tax rules.