17percent GST imposed on 1,000 sq ft shops 

ISLAMABAD: The Federal Board of Revenue (FBR) has defined Tier-1 for retailers as having those with an area of more than 1,000 square feet located at luxury shopping malls with a standard rate of General Sales Tax at 17 percent.

The FBR plans to generate Rs2,600 billion through GST at both import and domestic fronts as well as through imposition of Federal Excise Duty (FED) out of total fixed annual tax collection target of Rs5,550 billion for the current fiscal year.

The FBR’s Member Inland Revenue Policy and Spokesman Dr Hamid Ateeq Sarwar said the circular for making measures of Sales Tax operational has been issued in order to generate Rs2,600 billion through GST on domestic and import stage as well as through FED. For the second tier of retailers, the small retailers will have to pay fixed rate of tax on the basis of electricity bills.

The circular issued by FBR on Friday stated that 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 the standard regime. A new condition (e) has been added to the existing definition of ‘Tier-1 retailer’ under section 2(43A) of the 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.

Changes in regime of Tier-1 retailers: I Sub-section (9A), relating to tier retailers, has been substituted, providing as under: Option to pay 2% turnover tax has been withdrawn. (i) 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. (ii) 6 (iii) 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. (iv) 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.

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