The Government of Pakistan has implemented a strict new regulation aimed at increasing General Sales Tax (GST) collection and enhancing transparency in the economy by bringing wholesalers and retailers into the tax net. Under this measure, the Federal Board of Revenue (FBR) has mandated that these businesses must integrate their operations with the Point of Sale (POS) system.
Condition for POS Integration:
According to the notification issued by the FBR, it is mandatory for any wholesaler or retailer whose monthly deducted adjustable Withholding Tax exceeds PKR 100,000 (for wholesalers) or PKR 500,000 (for retailers) to integrate their business with the FBR’s POS system.
This step has been taken to empower the tax machinery to accurately assess the actual sales of wholesalers, distributors, and retailers, thereby significantly boosting GST collection.
Withholding Tax Details:
In an effort to include retailers in the tax network, the government had already increased the Withholding Tax rates under Sections 236G and 236H of the Income Tax Ordinance. In the last fiscal year, the FBR collected PKR 82 billion in income tax from retailers.
Ambiguity in Revenue Figures:
The report points out that the government attempted to create ambiguity in the overall tax collection figures from the business community, giving the impression that they contributed over PKR 700 billion to the national exchequer. In contrast, the salaried class alone paid over PKR 600 billion in income tax in the last fiscal year after book adjustments.
The FBR has made these amendments to the Sales Tax Rules under Section 50 of the Sales Tax Act, 1990, with the primary objective of curbing large-scale tax evasion.
Would you like me to elaborate on the FBR’s previous attempts to integrate retailers into the POS system?
