367 retailers ordered to integrate with POS system by March 10

KARACHI: Federal Board of Revenue (FBR) offices in Karachi have asked another 367 tier-1 retailers to integrate to its point of sale (POS) system by March 10 or face consequences.

According to a notification, when these retailers named in the list file sales tax return for the month of February 2022 their input tax claim would be disallowed, without any further notice or proceedings, creating tax demand by the same amount if they do not integrate within the stipulated period given to them.

The names of retailers have been identified by the Large Taxpayers Office (LTO), Medium Taxpayers Office (MTO), Corporate Tax Office (CTO) and Regional Tax Office (RTO-I and RTO-II).

A retailer who has been named in the list said that he would be integrating his business as soon as possible. “Everyone has to integrate,” the retailer said, requesting for anonymity. “It’s just a matter of time.”

However, he cited corrupt practices of FBR officials as the reason for not integrating so far. “We have been paying taxes plus bribes,” he said, pointing out that if one had no choice but to pay a bribe, “why would one not evade taxes?”

On top of that, he pointed out that lawyers also used the FBR’s name to frighten retailers. “There needs to be transparency and you will see everyone integrating and paying taxes willingly,” said the source, who owns retail outlets in the PECHS area in Karachi.

Apart from Karachi, FBR offices in other cities have issued list of 1,054 retailers, totaling to 1,421 across the country.

Previously, FBR identified 4,200 tier-1 retailers and out of them, 3,600 have already integrated with the POS system. A total of 17,000 retail outlets with over 19,500 cash counters are integrated with the POS system.

The FBR said that adjustable tax of non-integrated tier-1 retailers during a tax period would be reduced by 15 percent. The figure of 15 percent has been raised to 60 percent vide Finance Act, 2021.

An official of the FBR said they were targeting retailers who have bank’s POS machines to receive money from customers apart from cash. However, there were “difficulties since some retailers hide the machines when FBR personnel visit them”.

FBR was now collecting information from banks about number of active POS machines, and who those machines were extended to. “It will be a gradual process. People have gradually been integrating. Some are resisting but it would be better for them if they don’t resist and integrate,” the official said.

Recently, LTO Karachi reported a collection of Rs1.0034 trillion from July 2021 to February 2022, which was 45 percent more when compared to the same period last year and also exceeded the set target by Rs83 billion. In the month of February, it collected Rs105.5 billion.