ISLAMABAD: The Federal Board of Revenue (FBR) has stepped up its drive to bring retailers under tax net, ordering the establishment of a specialised cell in all tax offices for the purpose.
The tax authority issued detailed instructions on Thursday to its field formations for identifying potential retailers who could be brought under the tax net.
As per the details, a cell will be established in each regional tax office (RTO), enforcement and collection or broadening of tax base zone across the country. The officers/officials posted at the cell will report directly to the tax commissioners.
In the budget 2014-15, government introduced a two-tier regime for retailers. Those registered under the normal sales tax regime would pay standard rate of 17 per cent, while those falling under the second tier would be charged sales tax at different rates on their electricity bills.
As per order issued here by the FBR, the cell will ensure registration of all retailers of the first tier within the jurisdiction of all these RTOs, etc. The FBR has already worked out the list of retailers who will be segregated into the two tiers.
To enhance the base of retailers and identify the potential evaders, the revenue authority has asked the tax offices to carry out territorial surveys, conduct internet search and get details from trade directories to identify the additional retailers.
Moreover, list of people having commercial connections and total electricity bill exceeding Rs600,000 in the preceding 12 months (average Rs50,000 per month) shall be obtained from the electricity supply companies.
The FBR also directed the field formations to approach all retailers liable to be registered and persuade them for registration, either directly or through their representative associations.
Moreover, assistance of the management/association of the shopping mall/plaza may also be obtained if need be.
The FBR also asked tax officials to issue written notices to retailers requiring them to get sales tax registration immediately.
However, the board ordered the tax officials to facilitate and assist retailers for filing in the sales tax registration form, and to maintain proper records, including list of retailers, maps, notices issue, replies received and registrations done.
A retail chain operating under single ownership requires only one registration for all the branches, outlets, showrooms, etc. However, it may be ensured that all the branches, outlets and showrooms were mentioned in the registration application and profile.
In case of a retailer chain operating as franchise or other arrangement, where the individual branches or outlets have separate ownership, each branch or outlet would be registered separately.
The retailers who fall in the first tier, the standard one, are also required to install and operate Fiscal Electronic Cash Registers (FECRs) of the specifications approved by the FBR. The cell shall inform PRAL after registration of the first tier. The PRAL would then arrange proper configuration of all the FECRs of that retailer for enabling data-link with FBR’s database.
For the second tier, the RTO shall coordinate with the electricity distribution companies, including Discos and M/s K-Electric Limited, to ensure that sales tax at the prescribed rates were charged in the electricity bills of all such retailers.
The tax commissioner is empowered to exempt all those retailers from registration who were already registered under the sales tax act. However, the commissioner will issue exclusion order after full examination.
Published in Dawn, July 25th , 2014