The Federal Board of Revenue (FBR) has made it compulsory for wholesalers and retailers to integrate their businesses with the Point of Sale (POS) system if their deductible withholding tax exceeds Rs100,000 or Rs500,000 per month, respectively.
The measure is aimed at enabling tax authorities to verify actual sales and improve General Sales Tax (GST) collection.
According to an FBR notification, the amendment to the Sales Tax Rules, 2006, has been made under Section 50 of the Sales Tax Act, 1990, read with Sections 22 and 23. The new sub-rule, added to Rule 150Q, states: “Retailers whose deductible withholding tax under Sections 236G or 236H of the Income Tax Ordinance, 2001, during the immediately preceding period exceeds Rs100,000 or Rs500,000, as the case may be, shall be required to integrate their business under clause (g) of sub-section (43A) of Section 2 of the Sales Tax Act, 1990.”
Sections 236G and 236H pertain to advance tax collection on sales to distributors, dealers, wholesalers, and retailers. The rule aims to bring high-volume businesses into the documented economy by tracking their sales electronically through FBR’s POS system.
In recent years, the government has raised withholding tax rates under these sections to expand the retail tax base. During the last fiscal year, FBR collected Rs82 billion in income tax from retailers alone. However, total reported revenue from traders — including wholesalers and small businesses — exceeded Rs700 billion.
In contrast, the salaried class contributed over Rs600 billion in income tax during the same period, up from the initially reported Rs555 billion after adjustments.
While the new rule applies to only a limited number of wholesalers and retailers with higher deductible withholding tax liabilities, FBR officials expect the integration drive to strengthen sales documentation and improve transparency in revenue collection across Pakistan’s trading sector.
