Budget 2022-23: Recommendation to exclude furniture manufacturers from the category of Tier-I retailers – Business Pro-IQRA

ISLAMABAD: Federal Tax Ombudsman (FTO) Dr Asif Mahmood Jah has asked the Federal Board of Revenue (FBR) to exclude furniture manufacturers from the category of Tier-I retailers (large retailers) through policy amendments in the Budget 2022-23. is recommended.

In this regard, the FTO issued recommendations to the FBR for the upcoming Budget (2022-23) to exclude furniture manufacturers, low income manufacturers-cum-retailers from the provisions of Section 2(43A) of the Sales Tax Act, 1990. are of.

The FTO has recommended resolution of the grievances of furniture manufacturers by raising the area limit for furniture business registered as Tier-I retailers with FBR.

Complaints filed by furniture manufacturers of Islamabad against Federal Board of Revenue (FBR) for excluding furniture business from Tier-I retailers as applicable under Section 2 (43A) of the Sales Tax Act, 1990 (Act) .

In short, the complainants stated that the furniture shops/showrooms in order to receive orders from customers require a wide open space for displaying bulky pieces of furniture which are not for retail sale, however, they cannot be taxed. have to come into the area as they have occupied the designated cover area.

As per Section 2(43A) of the Sales Tax Act, shops which are located in air-conditioned malls or are part of a national or international chain of stores or having an area of ​​up to 1000 sq. etc. fall under the purview of Tier-I retailer and are required to be registered as the same, but for furniture shops/showrooms, they do not fall in the above category on the ground that they are mostly not located in air-conditioned stores. Malls are neither part of a chain of national or international stores nor do they fall under the fast-growing consumer goods category.

Before Budget 2021-22, the covered area required for registration as a Tier-I retailer was 1000 sq ft.

As indicated by the Pakistan Furniture Association, the government increased the required cover area for furniture shops from 1000 square feet. Up to 2000 sq. ft. However, a furniture store requires a huge space for display.

The complainants prayed that directions be issued to the FBR to exclude the furniture shops/showrooms from the purview of Section 2(43A) of the Act and also remove the status of the covered area.

During investigation, it was revealed that the arguments made by the complainants that the application of clause (e) under sub-section 43A of section 2 of the Finance Act, 2019 has been excluded and is not applicable to furniture manufacturers. This is an issue relating to policy matters and necessary interventions in the Sales Tax Act, which is stipulated in the FBR. is outside the jurisdiction of

In view of the Supra, the FTO recommended the FBR to look into the matter and address the grievance of the furniture manufacturing taxpayers in order to create ease of doing business and recommended that sub-section of section 2 of the Sales Tax Act, 1990 Appropriate amendment should be made to 43A. , will be considered in favor of the complainants and the proposal for non-implementation of clause (e) of the above may be included in the upcoming budget proposals for the year 2022-23. The complainants have appreciated the intervention of the FTO in this long standing issue; Due to which even the low income manufacturers were being burdened with higher tax due to the position of covered area only, for the selection of units as Tier-1 retailers, which in the case of furniture makers were selling to the low income manufacturers. Does not match – Co-retailers, FBR added.

This story was originally published in Business Recorder on March 27, 2022.

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