Kashif Anwar, President of the Lahore Chamber of Commerce and Industry (LCCI), has called on the Federal Board of Revenue (FBR) to review its recent directive, which compels Tier-1 retailers to integrate with the point of sale (POS) system if their deductible withholding tax under section 236H of the Income Tax Ordinance 2001 exceeds Rs. 100,000 in the last 12 months.
In a letter addressed to Chairman FBR, Malik Amjed Zubair Tiwana, Anwar requested the tax authority to amend SRO 1842(1)2023 dated 21 December 2023. He cautioned that the current ruling would adversely affect merchants in 21 sectors/products who lack experience, technical knowledge, and financial resources.
Anwar argued that although the condition of 1,000 square feet was removed in the previous budget, the imposition of 236H has now taken its place, rather than boosting retailer turnover and reducing the tax rate.
Compliance with 236H necessitates hiring professional accountants for record-keeping, submitting statements, and reporting to FBR. Additionally, the installation of POS systems would escalate costs for retailers already facing financial challenges.
An overnight implementation of a sales tax structure, Anwar noted, could lead to complications and negatively impact currently tax-compliant and documented retailers. He expressed concern that these sudden changes might further discourage unregistered retailers.
Highlighting potential penalties and increased financial difficulties for newcomers, Anwar stressed the urgency of the situation, urging FBR chairman to intervene promptly.
As a viable solution, he proposed revising the SRO by raising the deductible WHT threshold for POS system integration from Rs. 100,000 to Rs. 500,000. According to Anwar, this adjustment could significantly reshape the retail landscape and facilitate compliance with evolving tax regulations.
