No gas, electricity for big retailers without integration

KARACHI: Big retailers, i.e., Tier-1 retailers have no option but to integrate their businesses with the online system of the Federal Board of Revenue (FBR) because the law has been introduced to disconnect electricity and gas of such retailers on non-compliance.

The Tax Laws (Third Amendment) Ordinance, 2021 has been promulgated, under which major changes have been introduced to the Sales Tax Act, 1990.

A new section 14A has been introduced, empowering the FBR to direct the utility companies to suspend the connections of identified Tier-1 retailers who have failed to integrate their businesses with the revenue board.

In this regard, the FBR will issue a Sales Tax General Order (STGO) to include the names of identified Tier-1 retailers, who are required to install Point of Sale (POS) and connect their sales and purchase with the FBR.

The Sales Tax Act, 1990 has explained the Tier-1 retailers as 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 wholesale basis to the retailers, as well as on retail basis to the general body of the consumers; a retailer, whose shop measures 1,000 square-feet in area or more or 2,000 square-feet in area or more in the case of retailer of furniture; a retailer who has acquired point of sale for accepting payment through debit or credit cards from the banking companies or any other digital payment service provider authorised by the State Bank of Pakistan.

To further broaden the sales tax net, the revenue board separately issued a notification to impose additional sales tax up to 17 per cent to be collected through gas and electricity bills from persons who are not registered under the sales tax or not on the Active Taxpayers List (ATL) maintained by the FBR.

The extra sales tax would be imposed on industrial and commercial consumers of gas and electricity. The sales tax rate would be 17 per cent for industrial consumers. However, there are slabs for commercial consumers of gas and electricity.