Islamabad, Nov 12: The Federal Tax Ombudsman (FTO), Dr. Asif Mahmood Jah, has instructed the Federal Board of Revenue (FBR) to address discriminatory sales tax registration.
This came after a business forum filed a complaint about the sales tax registration process.
The complainant wanted single-shop retailers removed from the Tier-1 list, which requires them to integrate with the FBR’s Point of Sale (POS) System.
According to SRO 608(1)/2014, retailers with shop areas of 1000 sq ft or more must integrate with the FBR POS System. The complainant argued that sales tax should be based on turnover, not shop area.
The FBR clarified that sales tax applies to taxable supply, not area, and Tier-1 retailers follow the standard tax regime.
However, organizations like the Lahore Chamber of Commerce and Industry (LCCI) and Anjuman-e-Tajran supported the complainant’s view.
The Ombudsman noted that while the FBR aims to document the economy, the policy creates an unfair environment.
POS-integrated retailers face strict regulations, while non-integrated ones enjoy a more lenient tax regime. This leads to unhealthy competition.
The Ombudsman suggested that the FBR should meet and consult stakeholders before preparing a budget, including the ‘Federation of Chambers of Commerce and Industry’.
The FBR was instructed to reconsider its policy for registration of sales tax to make the taxation structure more just.
