Tier-1 retailers avoiding POS system: GST return form amendment aimed at disallowing 60pc input tax credit

ISLAMABAD: The Federal Board of Revenue (FBR) has amended the monthly sales tax return form to insert a new column for disallowing 60 percent input tax credit to big retailers (Tier-1) who had failed to integrate with the FBR’s point of sales (POS) system.

The FBR has issued SRO 407(I)/2022 here on Tuesday to the Sales Tax Rules, 2006 for notifying amended monthly sales tax return form (STR-7).

The amendment in the sales tax return form also included provision for reversal of inadmissible input tax through a new column for the tier-I retailers if they have subsequently issued certificates for exclusion of this requirement in terms of the STGO 1 / 2020.

In order to implement the restriction of input tax in terms of section 8-B(6), the FBR has added two new columns i.e. 6B and 6C in the sales tax return form.

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Under the column 6B, inadmissible input tax has been auto calculated by the system applying restriction of input tax in terms of section 8B(6) of the Sales Tax Act.

Under the column 6C, there is a provision of the Reversal of inadmissible input tax is given which is subject to the exclusion as provided under sub-pare (II) & (III) of para 2 of the sales tax general order (STGO) No. 1/2022.

A tax expert said that the FBR after introducing provisions of electronic integration has been in constant process to introduce ways and means to ensure electronic integration of all TIER-1 retailers across the board. The recent amendment is also a part of this ongoing exercise.

The FBR had issued a list of 1,358 big retailers (Tier-1), which are required to be integrated with the FBR’s POS system and would be denied 60 percent input tax credit in case of non-integration by February 10, 2022.

The board has decided to raise sales tax demand against these big retailers (Tier-1), who are still not integrated with the FBR’s POS system by the deadline of February 10, 2022.

Copyright Business Recorder, 2022