FBR’s faulty sales tax portal giving nightmares to retailers

LAHORE: Federal Board of Revenue (FBR) point of sales (POS) integrated tier-1 retailers have been facing plenty of challenges in filing tax returns for the past two months due to the faulty National Sales Tax Return (NSTR) portal.

Businesses were facing difficulties in complying with the complicated and erroneous processes, resulting in disruptions in business operations, Chainstore Association of Pakistan (CAP) said in a letter written to Finance Minister Shaukar Tarin.

The delay created unsustainable backlog of commercial risks not only for small and medium-sized chain stores with limited resources but for large enterprises with sufficient resources too, it added.

CAP said that many of the problems were already pointed out to the FBR in a meeting with DG Retail and Business Integration Committee a month ago. However, the issues remained unresolved.

CAP again highlighted the issues during the FBR chairman’s recent visits to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Lahore Chamber of Commerce and Industry.

CAP Chairman Tariq Mehboob said that the reason these problems were not getting resolved could be due to capacity limitations of the FBR IT setup.

In case, the government did not resolve the matters raised by the integrated retailers and confidence declined, CAP feared decline in compliance.

“Integrated retailers have had to pay extra sales tax for consecutive two months due to disallowance of genuine credit invoices by the NSTR portal. Once the portal is fixed, hundreds of businesses will need to revise their returns and seek adjustment of extra sales tax paid which is a cumbersome process,” the letter read.

CAP has listed 15 major issues in the NSTR portal being faced by all integrated tier-1 retailers. Fully compliant businesses were yet not able to reconcile thousands of sale invoices, which were synced with the FBR system during the preceding month, with their own records as the FBR-IMS system report does not allow identification of individual invoices.

As a result, integrated businesses have no choice but to calculate their payable sales tax on a lump sum-basis, with the risk of paying extra sales tax, which adds to the cost of doing business.

The system does not accept the manual sale entries due to discrepancy in Annexure-C. Tire-I retailers were unable to upload sales tax withholding using the template provided. Similarly, the POS service free of Rs1 per invoice does not appear in the return, while the challan was accessible, but banks were unable to fetch it in records.

The system showing a figure “purchase from unregistered person” on main page, whereas tracking of this entry was unavailable in the whole sales tax return. Similarly, the FBR portal does not accepting Annex-A and Annex-I uploaded files, only accepting manual entries.

CAP pointed out that NSTR did not provide the purchase type for unregistered purchases alongside the provisional invoices in their entirety. Further, when the tire-1 retailers claimed input, the return does not indicate inactive parties, and they were also unable to upload sales tax withholding using the template provided by the FBR system.

CAP suggested that in Annex-C of the sales tax return, POS identification number should be declared by the FBR. “It will help the tire-1 retailers to reconcile at the time of audit,” it said.

Many unclaimed provincial service invoices and goods invoices do not appearing in Annex-A and Annex-I. The sales amount against reduced rate of 12 percent and standard rates 17, was not appearing separately on the main page of the return.

Due to the above issues, after filing returns for January and February 2022, huge liabilities of sales tax have also started appearing as payable in the next month’s return. As a result, tier-1 retailers were facing difficulties and delays in submitting their sales tax returns, CAP informed.

It also asked for timely updates regarding issues being resolved by FBR/PRAL on the website.