KARACHI: The Federal Board of Revenue (FBR) on Thursday amended the Sales Tax Special Procedure Rules, 2007 to impose sales tax on retailers as announced in the federal budget 2014/2015.
To implement the changes the board issued SRO 608(I)/2014 which would apply to all persons making supplies from retail outlets to end consumers, including wholesalers-cum-retailers, whether registered or not, who shall be deemed to be retailers in respect of such supplies for the purposes of this Chapter and also to persons making supplies of electric power to retailers.
However, the changes will not apply to the following registered persons, namely:-
— vehicle dealers paying sales tax in the manner prescribed in Chapter VIII;
— registered retailers exclusively making supplies of goods specified in Chapter XIII, on which extra tax has already been paid in the manner prescribed therein.
Registration: The FBR said that retailers falling in any of the following categories shall be required to be registered as a retailer under the Act, in the manner specified in Chapter I of the Sales Tax Rules, 2006:
— 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 who has a credit or debit card machine;
— a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees six hundred thousand: and
— 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:
Provided that the provisions of this Chapter shall remain applicable to retailers who do not obtain registration:
Provided further that the retailers operating as a unit of a franchise or any other arrangement of a national or multinational chain of stores, shall obtain a separate registration as distinct from their principal.
Retailers required to pay tax on standard rate. all the retailers required to get registered with the sales tax department would pay sales tax at normal rates and all the provisions of the Act and rules would be applied on them.
The retailers making supplies of finished goods of the five sectors specified in notification No. S.R.O. 1125(I)/2011, dated the December 31, 2011 shall pay sales tax in respect of such supplies at the rates prescribed in the said notification.
The retailers have been required to install and operate Fiscal Electronic Cash Registers (FECRs), and to issue invoices only there from to their customers.
Retailers shall provide seamless and real-time access of their FECRs data to the Board and also allow on-site physical inspection as and when authorized by the Commissioner Inland Revenue having jurisdiction, the notification said.
Other retailers shall pay sales tax through electricity bills: Retailers not falling in the categories specified normal tax regime, shall be charged sales tax through their electricity bills by the persons making supplies of electric power, at the rates specified in sub-section (9) of section 3 of the Act, in the manner as specified hereunder, which shall be in addition to the tax charged on supply of electricity under sub-sections (1), (1A) and (5) of section 3 of the Act.
Every person making supplies of electric power shall charge and collect sales tax at the rates specified in sub-section (9) of section 3 of the Act, from every retailer having a commercial electricity connection:
Provided that sales tax under sub-section (9) of section 3 of the Act shall not be charged in cases where the person making supplies of electric power receives a written order from the Commissioner of Inland Revenue to the effect that –
— the consumer is not engaged in any retail business; or
— the consumer is already registered and paying sales tax through monthly sales tax returns.
The amount of sales tax charged from retailers shall be shown separately in the electricity bill or invoice issued by the supplier of electric power, the notification said.
The supplier of electric power shall collect and pay the amount of sales tax from retailers in the manner as prescribed in Chapter III.
Conditions and limitations: The amount of sales tax charged and collected through the electricity bill shall not be adjustable by the supplier of electric power and shall be paid by him in full into the treasury.
The tax paid through electricity bill by a retailer as prescribed in rule 6, shall be construed as the discharge of final tax liability for the purpose of sales tax and he shall not be entitled for any input tax adjustment or refund there from.
Issuance of invoice or cash memo: Every retailer operating under normal tax regime shall issue serially numbered invoices or, as the case may be, cash memos in respect of each supply made by him, manually or through electronic cash register, and from such date as may be specified by the Board, the invoices shall be issued through Fiscal Electronic Cash Register.
Payment of sales tax and filing of return: Every retailer operating under rule 5 shall deposit the sales tax due along with his return on monthly basis in the manner prescribed in Chapter II of the Sales Tax Rules, 2006.
A retailer operating under special tax regime shall not be required to file monthly sales tax return.
Audit or scrutiny of record: All the registered retailer operating would be subjected to audit as per normal procedure.
However, retailers operating under final tax regime shall not be subject to audit provided they are properly paying the sales tax through their electricity bills.