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Integrated retailers unable to continue compliance of PoS

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LAHORE: Retailers already connected to FBR-POS Integration system are unable to file correct tax returns for past two months due to malfunctioning of the new National Sales Tax Return (NSTR) portal especially in the case of integrated Tier-1 retailers.

The Chainstore Association of Pakistan has written a detailed letter to Finance Minister Shaukat Tarin on March 22, 2022, highlighting the pressing issues being faced by Integrated Tier-1 retailers and stated that due to the increasing problems the businesses are unable to comply with complicated and erroneous processes. In the recent past, the official trade body for organized retail sector has identified the various deficiencies and communicated them to Federal Board of Revenue (FBR) in meetings and letters multiple times. Upon the visit of FBR Chairman to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) this week, these issues were highlighted once again, however the problems have still not been resolved due to possible capacity limitations of the FBR IT setup.
Due to the flawed FBR system, integrated retailers have had to pay extra sales tax for consecutive two months due to disallowance of genuine credit invoices by the NSTR portal. Once the portal is fixed, hundreds of businesses will need to revise their returns and seek adjustment of extra sales tax paid which is a cumbersome process.

In its letter to Finance Minister, CAP has listed 15 major issues in the NSTR portal being faced by all integrated Tier-1 retailers. For example, fully compliant businesses are still unable to reconcile thousands of sale invoices which have been synced with the FBR system during the preceding month with their own records due to FBR-IMS system report which does not allow identification of individual invoices so far.
As a result, integrated businesses have no choice but to calculate their payable sales tax on a lumpsum basis and are at risk of paying extra sales tax due to technical deficiencies of the system which adds to the cost of doing business, stated Tariq Mehboob, Chairman Chainstore Association of Pakistan.

In addition to the issues related to the NSTR portal, CAP has also identified 12 other technical and operational challenges such as POS invoices continue to be duplicated or missed, for which corrections cannot be made by the retailers; many invoices cannot be verified by end-customers even after 24-48 hours; and POS machines appearing disconnected during off-peak periods. FBR field formations have also subjected already integrated businesses with notices pertaining to incorrect assessment of ‘further’ tax which is not subject to sales to end-consumers; for deposit of short paid tax on account of excessive amounts appearing in Annex C of sales tax returns; proceedings for suspension/blacklisting due to past supplies from suppliers inactive in sales tax; and even calls to deposit extra ‘advance tax’ despite being integrated, in order to meet FBR revenue targets.

Even large chainstores have been inundated with this myriad of problems while small and medium retail chains lack the capacity and resources to manage the various challenges. It is feared that organized retailers may not be able to survive if they continue to be heavily distracted from their commercial operations amidst such major disruptions caused by integration, Tariq said.