Islamabad, February 17, 2025 – The Federal Board of Revenue (FBR) has introduced stricter regulations concerning the Point of Sale (POS) integration for Tier-1 retailers in a move aimed at enhancing transparency and compliance within the retail sector. The new rules, announced through SRO 164(I)/2025, amend the Sales Tax Rules, 2006, and represent the FBR’s increased efforts to prevent tax evasion and ensure accurate sales reporting.
Under the revised regulations, the FBR now holds the authority to seal the premises of Tier-1 retailers who issue unverified invoices or disconnect from the FBR’s database for more than 48 hours. Retailers will be required to ensure that any invoices generated during offline periods are recorded and updated within 24 hours of reconnecting to the system. Failure to maintain proper records during offline periods will result in the sealing of their business premises. This marks a significant shift from the previous rules, where FBR officials could only seal outlets if three unverified invoices were issued in a single day or five within a seven-day period for the same Sales Tax Registration Number (STRN). The new regulations significantly lower the threshold, further emphasizing the FBR’s determination to combat tax evasion and ensure comprehensive tax compliance.
The FBR has also outlined a structured process for the de-sealing of business premises once they are sealed due to non-compliance. The retailer will need to pay a penalty under the provisions of Section 33 of the Sales Tax Act, after which the Commissioner Inland Revenue will issue a de-sealing order within 24 hours, provided that the technical issues have been resolved. Retailers retain the right to appeal the penalty, and a software audit will be conducted on all POS machines within three working days of de-sealing. The tax liability will be assessed based on the findings of this audit. If the tax demand remains unpaid, the premises will be re-sealed after 15 days, with a minimum closure period of one month.
The FBR’s latest decision to tighten POS regulations comes as part of its broader initiative to modernize the country’s tax collection system. These changes underscore the growing importance of technology in tax administration, as the use of POS systems has become central to sales reporting and real-time tax monitoring. The FBR’s decision is a clear signal of its commitment to addressing the long-standing issues of tax evasion and fraudulent invoicing in Pakistan’s retail sector.
The move also reflects the FBR’s strategic focus on increasing transparency and fostering a more compliant retail environment. By reducing the threshold for sealing outlets and placing greater emphasis on the integration of technology into tax processes, the FBR aims to create a more efficient and accountable retail sector. Retailers will now be required to adopt stricter internal controls and more effective systems for ensuring that their sales data is reported accurately and promptly.
With the new rules now in effect, businesses in the retail sector will need to adapt quickly to avoid penalties and ensure compliance with the updated regulations. As the FBR continues to modernize and streamline tax reporting processes, the retail industry faces a crucial opportunity to embrace digital solutions that not only meet regulatory requirements but also contribute to a more transparent and efficient economy. Through these measures, the FBR is working toward a future where tax evasion is minimized, compliance is the standard, and the retail sector can thrive within a fair and transparent framework.