FBR’s committees to decide retailers’ eligibility for sales tax registration

KARACHI: Market committees constituted by the Federal Board of Revenue (FBR) will decide eligibility of retailers and wholesalers for sales tax registration, a top official said on Thursday.

“The market committees – comprising officials of FBR and representatives of trade associations – will evolve criteria for mandatory sales tax registration for retailers and wholesalers,” said Badaruddin Ahmed Qureshi, chief commissioner Inland Revenue of Regional Tax Office (RTO)-II Karachi.

In October this year, the FBR and business associations signed an agreement to facilitate small businesses in paying taxes and filing their declarations.

The FBR made it mandatory for buyers on purchases above Rs50,000 to furnish computerised national identity card. The condition has been implemented from August 1, 2019. The small businesses opposed the condition and refused to comply with the condition. However, the government and business association sit together and decided to resolve the issue amicably.

Earlier this week, the FBR notified market committees with the jurisdiction of 17 regional tax offices in the country in pursuance to the agreement.

Qureshi said an awareness campaign would be launched in markets across the country to encourage retailers and wholesalers for registration with the tax authorities. He said the FBR would introduce simple registration forms to bring the segment of the economy into the tax net.

The market committees would find out solution through alternate dispute resolution in case of any issue between the taxpayers and the FBR.

The chief commissioner said the market committees would help the FBR set turnover amount of retailers and wholesalers for the purpose of tax payment.

The October meeting decided that the retailers operating in an area of 1,000 square feet would require sales tax registration. However, the market committees would decide registration in case a retailer operating in such area but does not qualify for registration. The commissioner said sales tax registration is mandatory for a retailer operating in an area of 1,000 square feet. The retailer is also required to integrate his/her sales invoices with online system of the FBR.

Quershi said the tax office started meetings of the market committees to make retailers aware about the mandatory registration with the tax authorities.

In the first phase, the market committees would identify the big retailers and recommend installation of point-of-sale software for integration with the FBR. The retailers would be other than those who have already been served notices for registration.

Explaining the advantage of integration, the commissioner said the supplies of finished fabric and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather would be entitled to a reduced rate of 14 percent instead of normal rate of 17 percent.

Further, customers would be entitled to receive cash back of up to 5 percent of the tax involved in the manner and to the extent as may be prescribed, the chief commissioner added.