Federal Board of Revenue has devised rules for implementing the taxation steps taken by the government through Finance Bill 2014-15.
In a bid to bring 1.5 million retailers into tax net, FBR has notified rules of special procedures of Sales Tax after enactment of Finance Bill 2014-15. This is a step forward towards documentation of economy and completing the chain starting from manufacturers and ending at retailers’ stage. This area possesses such a huge potential. If tapped properly it can generate billions of rupees on annual basis.
In the wake of undocumented economy, it is really hard for the tax managers to determine the exact turnover of the retailers so FBR has devised mechanism on the basis of which certain categories would be brought into tax system this time.
If the FBR fails in bringing the retailers into tax net this time then this chapter would be closed forever so the tax machinery should move ahead in careful manner in order to avoid politicization of this important issue.
There are over 1.5 million retailers working in the country but their contribution for the national kitty is meager in terms of comparing their genuine incomes.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has asked the government time and again to bring retailers into tax net by imposing a fixed tax that could generate Rs54 billion from all over the country.
But the FBR does not expect such kind of huge revenues from retailers keeping in view the weak capacity of the tax machinery to collect tax from retailers spread all over the country.
FBR will go ahead by imposing tax on retailers in big metropolitans and in the first stage only 10,000 to 15,000 units can be brought into the tax system. This system, if it succeeds, could be replicated in other cities and towns in coming years.
According to notified rules, it has been made mandatory to install and operate Fiscal Electronic Cash Registers (FECRs) for issuing invoices to customers.
Retailers shall provide seamless and real-time access of their FECRs data to the FBR and also allow on-site physical inspection as and when authorized by the Commissioner Inland Revenue having jurisdiction.
Every retailer operating shall issue serially numbered invoices or, as the case may be, cash memos in respect of each supply made by him, manually or through electronic cash register, and from such date as may be specified by the Board, the invoices shall be issued through Fiscal Electronic Cash Register.
Five categories of retailers would be registered including retailer operating as a unit of a national or international chain of stores, retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks; retailer who has a credit or debit card machine; a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds six hundred thousand rupees; wholesaler-cum-retailer; engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers.
Every retailer operating shall deposit the sales tax due along with his return on monthly basis in the manner prescribed in Chapter II of the Sales Tax Rules, 2006. A retailer operating under rule 6 shall not be required to file monthly sales tax return.
