ISLAMABAD: The Fed­eral Board of Revenue (FBR) on Friday informed a parliamentary panel that retailers would face the closure of shops for failing to issue computerised invo­ices to ensure strict compliance and hinted at reconsidering the imposition of general sales tax on books and stationery items.

At a meeting of the Senate Standing Comm­ittee on Finance and Rev­enue presided over by Senator Saleem Mandviwalla, the FBR also assured the committee that retailers would be bound to accept debit and credit cards for payment, and in case of internet failures, they would be free to transact in cash without any punitive action.

Some committee members believed there could be challenges in case of internet suspension or failure in the background of past examples of internet suspensions on the orders of the government institutions. The committee is currently in the process of initial reading of the finance bill 2024-25 and will present its formal recommendations for amendments and proposals to the senate on June 22 for onward consideration by the government before the passage of the budget by the parliament.

Senate body directs FBR to rethink sales tax on books, stationery

Penalties on tax fraud

FBR Chairman Zubair Tiwana and his team told the committee that the Finance Bill 2024-25 aimed to enhance transparency within the tax system and combat tax fraud. It was emphasised that any business entity with five weekly receipts without a Point-of-Sale (POS) system would face closure. In the first instance, the said business would be sealed for seven days, followed by 30 days the next time, and the third such violation would lead to the imposition of a fine worth Rs500,000.

It was also proposed that the FBR would oversee the licensing of POS software companies. In response to queries regarding past fraud incidents involving POS systems, the FBR chairman clarified that the fraudulent activities were identified subsequent to their occurrence. It later transpired that some sales records had been removed from the POS since the businesses themselves installed the POS system. He further explained that the new integrated licensing system, managed by a third-party integrated company, will provide comprehensive oversight, thereby enhancing online sales visibility.

Mr Mandviwalla advocated for leniency in the case of sales tax returns, suggesting that warnings should precede penalties. Furthermore, it was disclosed that a penalty of Rs500,00 will be imposed for non-compliance with POS requirements. The FBR chairman explained that through the integrated licensing system, the FBR now possesses a dashboard to monitor the operational status of POS machines across various retail outlets.

The panel also expressed the view that stationery items should be exempted from sales tax, considering Pakistan has 22.5 million children aged 5 to 16 out of school. The committee then decided to defer deliberations on sales tax until the next meeting.

Published in Dawn, June 15th, 2024