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Federal Board of Revenue Mandate on Point-of-Sale Integration
1. Introduction
On March 22, 2024, the Federal Board of Revenue (FBR) issued SRO 428(I)/2024. This Statutory Regulatory Order (SRO) represents a significant step towards enhancing tax compliance in Pakistan. SRO 428(I)/2024 mandates the real-time integration of point-of-sale (POS) systems for certain designated business enterprises with the FBR's central database.
2. Definition of Point-of-Sale System
A point-of-sale (POS) system refers to electronic hardware or software utilized by a business to record and process transactions at the point of sale. This typically includes recording sales, generating receipts, managing inventory, and accepting customer payments.
3. Mandatory Integration of POS Systems
Pursuant to the Income Tax Regulations, 2002 (as amended by SRO 428(I)/2024), specific business enterprises identified by the FBR are required to integrate their POS systems with the FBR's database. These businesses are designated as "Integrated Enterprises."
4. Scope of Mandatory Integration
A. Expansion Of Geographic Scope
SRO 428(I)/2024 supersedes previously existing regulations by incorporating a new schedule. This new schedule broadens the geographic scope of mandatory POS integration to encompass the entirety of Pakistan. Previously, such regulations were only applicable in designated major cities.
B. Categories of Businesses Subject to Integration
The SRO mandates POS integration for various categories of businesses, including:
- Retailers: This encompasses various entities such as manufacturer-cum-retailers, wholesaler-cum-retailers, and importer-cum-retailers. Additionally, retailers fulfilling any of the following criteria are included:
- Operating as part of a national or international chain store.
- Located within an air-conditioned shopping mall, plaza, or center (excluding kiosks).
- Having a cumulative electricity bill exceeding PKR 1,200,000 for the preceding twelve months.
- Wholesaler-cum-retailers engaged in bulk import and supply of consumer goods.
- Possessing a retail space exceeding 1,000 square feet.
- Foreign Exchange Dealers/Exchange Companies
- Educational Institutions: This includes private schools, colleges, universities, professional institutes, and vocational training centers where monthly fees per student exceed PKR 1,000.
- Medical Service Providers: All private medical practitioners including dentists, physiotherapists, plastic surgeons, hair transplant surgeons, and veterinary doctors with fees exceeding PKR 500 are subject to the mandate.
- Private Hospitals and Medical Care Centers: This encompasses entities providing medical consultation, hospitalization, or ancillary services.
- Restaurants with Air Conditioning
- Hospitality Industry: This includes hotels, motels, guest houses, marriage halls, marquees, and clubs (including race clubs).
- Fitness and Leisure Facilities: This encompasses health clubs, gyms, physical fitness centers, swimming pools, and multipurpose clubs.
- Inter-City Travel by Air-Conditioned Road Transport
- Courier and Cargo Services
- Beauty and Wellness Establishments: This includes beauty parlors, clinics, slimming clinics, massage centers, and pedicure centers equipped with air conditioning.
- Medical Diagnostic Laboratories: This encompasses pathological laboratories and facilities offering X-ray, CT scan, MRI imaging, and similar services.
- Event Management Businesses: This includes photographers, videographers, and event managers with per-event fees exceeding PKR 50,000.
- Chartered Accountants and Cost and Management Accountants
C. Recordkeeping Requirements
The SRO stipulates that all transactions conducted by designated businesses must be recorded using a duly accredited Electronic Fiscal Device (EFD). An EFD is a system comprised of a Sale Data Controller (SDC) and at least one Point-of-Sale (POS) terminal.
Additionally, each POS terminal within a designated business establishment must be monitored by a CCTV camera. These recordings must be retained for a minimum period of three months and presented to the FBR Commissioner upon request.
