FBR to Deny Retailers 60% Input Tax Credit If They Fail in Installing the POS

The Federal Board of Revenue (FBR) has issued a list containing names of 6763 retailers (Tier-1), which are not integrated with the tax authority’s Point of Sale (POS) system. The retailers mentioned in the issued list would be denied the opportunity to claim input tax equal to 60% in their sale tax returns if they fail in integrating with the tax authority by 15 August of this year.

The FBR has put the list of Tier-1 identified retailers that are yet to integrate with the POS system on its web portal. The tax authority will update the aforementioned list on the 5th of each month and give the non-integrated retailers an opportunity to inform their concerned Commissioner that they’re not eligible to be classified as Tier-1 retailers otherwise they will be denied input tax credit if they fail to integrate with the POS system.

The FBR has also issued a Sales Tax General Order No-1 of 2022 as per which the tax authority is adopting a system-based approach to integrate retailers mentioned in the Tier-1 list with the POS, with effect from 1 August 2021.

If the identified Tier-1 retailers fail in integrating themselves with the POS by 15 of this month then they would be denied input tax credit equal to 60% claimed in the sales tax returns filed for the month of July 2021. This will be done without any notice and proceeding. However, if any retailer mentioned in the Tier-1 list feels, at any point, that it is not eligible to be classified as a Tier-1 retailer in light of other sections of the Sales Tax Act 1990 then that retailer may apply to its concerned Commissioner by 10 August 2021 with regards to get its name excluded from the list of Tier-1 retailers.

The list will be updated each month and retailers whose names remain in the list will be classified as Tier-1 retailers and 60% of their input tax credit will be disallowed in accordance with the provision of subsection (9A) of section 3 of the Sales Tax Act 1990. This applies to existing companies as well as new company registrations.