Shops having area more than 1000 sqft declared Tier-1 retailer

KARACHI: A new condition has been added to the existing definition of ‘Tier-1 retailer’ under section 2(43A) ofthe Sales Tax Act, 1990. Now, a retail shop having area more than 1000 square feet shall also fall under tier-1 and shall be liable to discharge its liability under standard regime.

The Federal Board of Revenue (FBR) has advised all field formations to ensure registration of such retailers and payment of due tax from them.

Government has notified changes in regime of Tier-1 retailers, as such pption to pay 2% turnover tax has been withdrawn; Provisions relating to SRO 1125(I)/2011 have been omitted, thus subjecting textile and leather items to normal rate except for the integrated retail outlets for which the rate shall be 14% as per amendment in Eighth Schedule.

A new proviso has been added wherein customers of Tier-1 retailers are entitled for pay-back up to 5% of sales tax involved in the sales tax invoice. This shall encourage the customers to demand sales tax invoice from registered retailers. However, these provisions shall be applicable when the Board so notifies.

Another new proviso aims at expanding the scope of real-time integration beyond textile and leather. These provisions shall become effective when the Board so notifies. After such notification, the input tax shall be reduced by 15% for retailers failing to integrate POSs in the prescribed manner, as provided in the newly inserted sub-section (6) in section 8B.

Moreover, in order to move towards standard sales tax regime, special procedures have been done away with by rescinding the Sales Tax Special Procedures Rules, 2007 and the Sales Tax Special Procedure (Withholding) Rules, 2007.

Further, to reduce tiers of legislation most of the sales tax general orders have also been rescinded. The provisions from the repealed instruments which were considered indispensable have been transposed either to the Sales Tax Act, 1990, or the Sales Tax Rules, 2006.

This change shall facilitate both taxpayers and officers by reducing number of legal instruments and making legal provisions more noticeable.

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