The Finance Ministry informed the National Assembly on Monday that the Federal Board of Revenue (FBR) collected a total of Rs. 590 million in Point-of-Sale (PoS) service fees during the previous fiscal year. This figure represents a notable decrease compared to the Rs. 660 million collected in the fiscal year 2022-23 and a significant rise from the Rs. 240 million gathered in FY22.
In a detailed written reply to the National Assembly, the FBR outlined that the service fee of Rs. 1 is levied on each sale invoice processed by tier-1 retailers. This system was implemented to streamline the tax collection process and ensure compliance from major retail outlets. The fee is intended to fund various initiatives within the Inland Revenue Service (IRS) and support its operational needs.
Purpose of the PoS Service Fee
According to the FBR, the revenue collected from the PoS service fee is allocated to several key areas. Primarily, the funds are used to support the welfare of IRS officials, providing them with necessary resources and enhancing their operational efficiency. In addition, the collected amount is directed towards the PoS prize scheme, which aims to incentivize and reward compliance among retailers. The remaining portion is spent on media campaigns designed to promote awareness and education regarding tax obligations and the benefits of the PoS system.
Decrease in PoS Service Fee Collection
The reduction in the PoS service fee collection from Rs. 660 million in FY23 to Rs. 590 million in the latest fiscal year raises questions about the reasons behind this decline. The FBR has yet to provide a detailed analysis of the factors contributing to this drop, but potential explanations could include changes in retail activity, adjustments in compliance levels, or modifications in the operational aspects of the PoS system.
Suspension of PoS Prize Scheme
One notable aspect highlighted in the report is the suspension of the PoS prize scheme for the past several months. The scheme, which was previously an integral part of the PoS service fee utilization, aimed to reward retailers who consistently adhered to tax regulations and actively participated in the PoS system. The suspension of this scheme could have contributed to the reduced revenue from the PoS service fee, as the incentive structure may have influenced retailer participation and compliance.
The FBR has not yet provided a specific timeline or rationale for the suspension of the PoS prize scheme. However, it is anticipated that the scheme will be reviewed and potentially reinstated in the future, depending on policy decisions and operational requirements.
Utilization of Funds for IRS Welfare
The allocation of PoS service fee revenue towards the welfare of IRS officials is a key component of the FBR’s strategy to enhance the effectiveness of the tax administration system. By investing in the well-being and professional development of IRS personnel, the FBR aims to improve service delivery and operational efficiency within the Inland Revenue Service.
The funding is also used to support media campaigns that raise public awareness about tax compliance and the benefits of using the PoS system. These campaigns play a crucial role in educating retailers and consumers about the importance of accurate invoicing and tax reporting, thereby fostering a culture of compliance and transparency.
Future Outlook
As the FBR continues to manage and allocate PoS service fee revenue, it will be important for the organization to address the factors contributing to the decline in fee collection and evaluate the impact of the suspended PoS prize scheme. The FBR’s focus on enhancing IRS welfare and promoting tax compliance remains a priority, and adjustments to the PoS system and related initiatives may be implemented to better align with the organization’s objectives and the needs of the retail sector.
The finance ministry’s report to the National Assembly underscores the importance of the PoS service fee in supporting the broader goals of tax administration and compliance. Moving forward, stakeholders will be keenly watching for updates on the reinstatement of the PoS prize scheme and any additional measures the FBR may introduce to optimize the collection and utilization of PoS service fees.
In conclusion, the collection of Rs. 590 million from PoS service fees highlights both the challenges and opportunities faced by the FBR in managing and leveraging this revenue stream. As the FBR navigates these issues, its efforts to enhance tax compliance and support IRS operations will be crucial in shaping the future of Pakistan’s tax administration system.