Integration of Tier-1 Retailers with FBR’s POS System

FBR through Sales Tax General Order No.1 of 2022 has issued/ instructed procedure of Integration of Tier-1 Retailers with FBR’s POS System and to follow a system-based approach to operationalize provision of law where all T-1Rs (Tier-1 Retailers) shall be liable to be integrated but not integrated, with effect from July 2021 (Sales Tax Returns filed in August, 2021).

Earlier the Finance Act, 2019 added sub-section (6) in section 8B of the Sales Tax Act, 1990 (“the STA, 1990”) whereby a Tier-1 Retailer “(T-1R)” who did not integrate its retail outlet in the manner prescribed under sub-section (9A) of section 3 of the STA, 1990 during a tax period, its adjustable input tax for that period would be reduced by 15%. The figure of 15% has been raised to 60% vide Finance Act, 2021.

In order to operationalize this important provision of law, a system-based approach is being adopted whereby all T-1Rs liable to be integrated but not integrated, with effect from July 2021 (Sales Tax Returns filed in August, 2021) will be dealt with as per the procedure laid down below: –

List of all identified T-1Rs shall be placed on FBR’s web portal

A list of all identified T-1Rs shall be placed on FBR’s web portal at www.fbr.gov.pk by 5th of every calendar month allowing them to integrate with FBR system by 10th of the month.

Exclusion of T-1R integration

In case a notified T-1R claims that it is not a T-1R as per the definition provided in Section 2(43A) of the STA, 1990, and therefore not liable to integrate, it shall apply to the Commissioner concerned for exclusion from the list by 10th of the calendar month, and the Commissioner would make a decision in this regard by 15th of the month.

Certificate of Exclusion of T-1R integration

The Chief Commissioners would forward all exclusion certificates issued by the Commissioners to Chief (POS) for giving effect in the ITMS by 16th of the month. The exclusion certificates not forwarded by the due date would not entitle a T-1R to relief as per this order.

Upon filing of Sales Tax Return for the month of July 2021 by all notified T-1Rs not integrated, the input tax claimed would be disallowed without any further notice or proceedings, creating tax demand by the same amount.

This process would be run every month as per the above schedule.

For more information on FBR’s new regulations / circulars/ SROs/ amendments in taxation laws in Pakistan please visit https://www.fbr.gov.pk/

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