Friday, March 31, 2023

FBR imposes Re1 service tax on the POS invoice

The Federal Board of Revenue (FBR) imposed a service tax of Re1 every invoice issued through all points of sale on Friday, effective immediately.

According to the Revenue Board’s SRO 1279 (I)/2021, it has been determined to impose service charges at the rate of Re1/invoice issued through all POS systems that are linked with the Federal Bureau of Revenue’s computerized system for real-time reporting of sales.

In addition to the monthly payment of sales tax and the submission of the sales tax return, the service charges would be collected by Tier-1 merchants that have linked their systems with the FBR’s system and put into a designated account.

Previously, the Federal Bureau of Revenue (FBR) published SRO 1006 (I)/2021 on August 9, 2021, notifying the public that a modification to the Sales Tax Rules, 2006 will be made to impose service charges in part on invoices generated through POS.

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Specifically, the rules provide that “the POS service charge of Re1/invoice should be collected by the Tier-1 merchants from the consumer and shall be deposited with the monthly sales tax return.”

Moreover, the Tier-1 store would deposit the POS service charge earned each month into a separate head of account, according to the agreement.

A further SRO 1005(I)/2021 was issued by the FBR outlining the procedure for the reward program. According to this scheme, customers of integrated Tier-1 retailers whose names and computerized national identity cards (CNICs) are notified through a random computerized draw would be eligible to receive a prize in respect of their purchases from the Tier-1 retailers would be eligible to receive a prize in respect of their purchases from the Tier-1 retailers.

A retailer who operates as a unit of a national or international chain of stores, or who operates in an air-conditioned shopping mall, plaza, or center, excluding kiosks, is classified as a Tier-1 retailer under the Sales Tax Act, 1990. A retailer who operates as a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on a wholesale basis to the retailers, is classified as a Tier-2 retailer under the Sales Tax Act, 1990.

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