Why do big stores add Re. 1 to every bill? Is the POS service fee lawful?

The Re. 1 added to receipts at large integrated stores is described in the law as a POS Service Fee. The Sales Tax Act, 1990 gives the Board a general power to levy fees and service charges, and the monthly sales tax return has a dedicated row for this Rs. 1 fee, which refers to SRO 1006(I)/2021. The SRO itself is not in the corpus this site draws on, so some details cannot be confirmed here.

What does the law say?

The power to levy a fee. Section 76(1) says the Board, with the approval of the Federal Minister-in-charge, may by notification in the official Gazette “levy fee and service charges for valuation, in respect of any other service or control mechanism provided by any formation under the control of the Board”, at rates specified in the notification. Section 76(2) lets the Board authorise and prescribe how the fees and service charges collected are spent. A footnote records that the words “Board with approval of the Federal Minister-in-charge” replaced “Federal Government” through the Tax Laws (Amendment) Act, 2020.

The return form. Form STR-7, the sales tax return in the Sales Tax Rules, 2006 as amended to 30 June 2025, has a row 35a below row 35, “Total amount to be paid”. Row 35a reads “POS Service Fee at the rate of Rs. 1 per charged vide Notification of SRO No. 1006(I)/2021 to be deposited in IRS Common Pool”, followed by the word “Fund” and an account number, with a reference to Annex-C. The row sits outside the sales tax calculation in rows 1 to 35.

The integration it relates to. The proviso to section 23(6) requires all Tier-1 retailers to integrate their retail outlets with the Board’s computerized system for real-time reporting of sales, from the date and in the manner the Board prescribes. The fee’s name ties it to point-of-sale (POS) systems of this kind.

Is the fee lawful?

Section 76 is a clear legal basis for the Board to levy fees and service charges by notification, provided the notification is issued with the Federal Minister’s approval and published in the Gazette. The return form in the Rules records that such a fee exists at Rs. 1 under SRO 1006(I)/2021.

What cannot be confirmed from the corpus:

• the text of SRO 1006(I)/2021 and whether it was made under section 76;
• who bears the fee, the customer or the retailer, and whether it may be shown on the customer’s bill;
• what it is charged per. The printed row reads “Rs. 1 per charged”, with a word apparently missing, so the unit (for example, per invoice) is not clear from the text;
• which retailers must collect it;
• whether sales tax applies to the fee itself.

These points depend on the SRO, which is not held here. This page does not fill that gap.

Worked example (illustrative figures)

A shopper at an integrated store in Karachi pays a bill of Rs. 2,360 and sees Rs. 2,361 at the till, with Re. 1 shown as a POS fee.

Suppose the store issues 30,000 receipts in a month and, as the row’s wording suggests but does not state clearly, the fee is Rs. 1 per invoice:

1. Fee collected: 30,000 x Rs. 1 = Rs. 30,000.
2. The store reports Rs. 30,000 in row 35a of its return for that month.
3. Per the row’s wording, that amount goes into the IRS Common Pool Fund, not into sales tax payable.

If the SRO measures the fee on a different basis, this arithmetic changes.

What if a shop that is not integrated charges Re. 1?

The Act does not describe a POS fee for non-integrated shops. Section 3B(1) covers any person who collects any tax or charge that was not payable and passes it on to the consumer: that amount must be paid to the Federal Government. Whether section 3B would reach a Re. 1 fee charged by a shop not covered by the SRO depends on the SRO’s terms, which are not held here.

Common mistakes

• Treating the Re. 1 as sales tax. The return form keeps it separate, in row 35a, after the total tax payable.
• Assuming the law is silent. Section 76 is the fee-levying power, and the return form names the SRO.
• Confusing the fee with the prize scheme. Rule 150ZEL lets customers verify integrated retailers’ invoices through the Tax Asaan app and report unverified ones for prizes. It does not mention the fee.

What to check in the official text

Read section 76 and the proviso to section 23(6) of the Sales Tax Act as amended to 30 June 2026, and row 35a of Form STR-7 in the Sales Tax Rules, 2006. Obtain SRO 1006(I)/2021 from the official Gazette or FBR to confirm who pays the fee, on what basis, and which retailers it covers.