FBR plans crackdown on bakeries, eateries to document sales

KARACHI: The Federal Board of Revenue (FBR) plans to launch a massive operation against bakeries and eateries to bring their sales into the documented economy, sources said on Friday.

The sources at the Regional Tax Office (RTO) Karachi said an extensive exercise has been initiated to identify the bakeries and eateries for determining their sales, which were not documented, resulting in a loss of revenue to the national exchequer.

A team of the RTO Karachi officials conducted a survey of over 1,000 bakeries and eateries to determine their sales potential. “The team identified a number of outlets for the installation of Point of Sales (POS) for integrating their sales with the FBR on a real-time basis,” an official at the RTO Karachi said.

The official also said to give them a fair chance before issuing notices for compulsory installation of POS machines, an awareness session was held at the tax office on Friday.

The official said installing a POS machine is mandatory by a retailer having specified criteria set by the revenue board. The government has initiated installing POS to document transactions made between retailers and consumers.

All retailers are required to integrate all their POSs with the FBR’s computerised system, who fall in the categories: a retailer operating as a unit of a national or international chain of stores; a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks; a retailer whose cumulative electricity bill during the immediately preceding 12 consecutive months exceeds Rs1.2 million; a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on the wholesale basis to the retailers, as well as on retail basis to the general body of the consumers; and a retailer, whose shop measures 1,000 square-feet in area or more.

The RTO official said that the bakeries and eateries had witnessed mushroom growth over the last few years but their share in the revenue contribution was nominal.

The official said the retailers had been informed that as per the Sales Tax Act, 1990, the installation of POS machines was mandatory for the retailers falling under the specific categories.

He said under section 33 of the Sales Tax Act, 1990, as amended by the Tax Laws (Second Amendment) Ordinance, 2019, specific penalty has been provided for the retailers failing to integrate.

“Under the newly-added clause 25 in the Table in section 33, a tier-1 retailer failing to integrate shall be liable to penalty of Rs1 million, and in the event of continuing failure may face sealing of his premises and embargo on his sales,” the official said, adding that further, disadvantage of failure to integrate, as provided in sub-section (6) of section 8B, is that the adjustable input tax of the retailer would be reduced by 15 per cent.

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