ISLAMABAD
The Federal Board of Revenue (FBR) on Thursday issued notification of registration of retailers on two-tier system basis in a bid to bring the top retailers into the tax net, as announced in the Finance Bill 2014-15.
The government in budget had approved the registration of retailers on two-tier system basis whereby (i) retailers part of national and international chains, located in air-conditioned malls having debit and credit machines; (ii) chargeability of the sales tax @ 5pc in case of monthly electricity bill up to Rs 20,000 and @ 7.5pc of the monthly electricity bill exceeding Rs 20,000.  Chairman FBR Tariq Bajwa in June 2014 had informed the Senate’s body that top 10,000 retailers would be brought into the tax net under the new scheme. He told that at present 2.5 million retailers are operating in the country. Out of total figure, only 8,000 are registered with the sales tax department. Therefore, the government has initially set the target of bringing top 10,000 retailers into the tax net.
In a latest development, the FBR has issued notification defining the two-tier system for the registration of the retailers. The first tier shall comprise retailers who are part of national or international chains of stores, or operating in an air-conditioned shopping mall, plaza or centre, (excluding kiosks), or retailer who has a credit or debit card machine; or a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees six hundred thousand, and (e) 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 consumers.
The remaining retailers shall fall in the second tier, who will be charged sales tax through their electricity bills at the following rates - 5 percent of monthly electricity bill up to Rs 20,000 and 7.5 per cent of monthly electricity bill above Rs 20,000.
Meanwhile, the FBR has also issued directions for the proper and effective implementation of this regime that included in each Regional Tax Office, in every Enforcement and Collection (E&C’) or Broadening of Tax Base CBTB”) Zone having territorial jurisdiction, a Cell shall be created for the purpose of registration of retailers and dealing with matters relating to enforcement of the above mentioned legal provisions. Sufficient number of officers/ officials shall be posted in the cell, which shall report directly to the Commissioner.
The aforesaid Cell would provide guidance and assistance to the retailers for filling in the sales tax registration form. Similarly, the Cell would compulsorily register those retailers who avoid or resist registration. Meanwhile, the Cell would maintain proper records, including lists of retailers, maps, notices issued, replies received and registrations done.
After the registration, the Cell shall keep monitoring these retailers and encourage them to be complaint, by regular filing sales tax returns, proper payment of sales tax, installation and proper operation of fiscal electronic cash registers (FECRs), maintenance of records etc. According to the FBR’s notification, the retail chains operating under single ownership (whether individual, AOP or company) require only one registration for all the branches, outlets and showrooms.  However, it may be ensured that all such branches outlets and showrooms etc are mentioned in the registration application.