The Federal Board of Revenue (FBR) has implemented a new regulation aimed at bringing wholesalers and retailers into the tax net, making it mandatory for them to register their businesses.
According to a notification issued by the FBR, amendments have been made to the Sales Tax Rules, 2006, under Section 50 of the Sales Tax Act, 1990, read with Sections 22 and 23.
Under the revised rules, the FBR has made it compulsory for wholesalers and retailers whose adjustable withholding tax deductions exceed Rs100,000 and Rs500,000 per month, respectively, to link their businesses with the Point of Sale (POS) system.
The FBR says the move will enable tax authorities to accurately assess the actual sales of wholesalers, distributors, and retailers, thereby improving general sales tax (GST) collection.
Earlier, to expand the tax net, the government had increased withholding tax rates for retailers under Sections 236G and 236H of the Income Tax Ordinance.
During the previous fiscal year, the FBR collected Rs82 billion in income tax from retailers. However, the government was accused of creating ambiguity in overall tax collection data by giving the impression that the trading community contributed over Rs700 billion to the national exchequer.
In comparison, the salaried class alone paid more than Rs600 billion in income tax last fiscal year, up from Rs555 billion previously reported, after book adjustments were made.
With the latest amendments to the Sales Tax Rules, the FBR has now made business integration mandatory for wholesalers and retailers meeting the specified tax deduction thresholds.
