CNIC misreporting no more a punishable offence for suppliers

Updated Oct 05 2019

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Business community insists they don't have any mechanism to check if buyer was showing fake or some third party’s CNIC. — Reuters/File
Business community insists they don't have any mechanism to check if buyer was showing fake or some third party’s CNIC. — Reuters/File

ISLAMABAD: To calm down disturbed businesses, the government on Friday decided to relax a condition of the sales tax act under which the misreporting of buyer’s CNIC number was a punishable offence.

The manufacturers and suppliers had been complaining that amendments to Sales Tax Act, 1990 under the Finance Bill 2019 had envisaged fines and punishments in case of wrong or misreported CNIC or national tax number (NTN) of buyers.

They have been insisting that they do not have any mechanism to check if the buyer was showing fake or some third party’s CNIC.

In a notification issue here, the Federal Board of Revenue (FBR) said “the CNIC or NTN of the buyer with respect to taxable supplies to an unregistered person shall be deemed to have been reported in good faith by the supplier” subject to certain conditions.

It added that the step has been taken “keeping in view the problems reported by the registered persons in ensuring proper identity of the buyer to fulfil the requirement of reporting NTN/NIC of the buyer in terms of section 23 of the Sales Tax Act, 1990.”

The tax invoice complies with the requirements of section 23(b) of the Act which envisages that the requirement of “name, address and registration, number of the recipient and NIC or NTN of the unregistered person, as the case may be, excluding supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.”

The NIC/NTN of the buyer will also be deemed to have been reported in good faith by the supplier provided payment made by or on behalf of the unregistered purchaser of the amount of the tax invoice, inclusive of sales tax and applicable further tax, is deposited into the supplier’s declared business bank account and the NIC provided by the purchaser is found authenticated by the National Data and Registration Authority (Nadra).

Also, it would be considered in good faith provided the NIC/NTN provided was not of the employee of the seller or of his associates as defined under the Income Tax Ordinance, 2001.

The issuance of a show cause notice to a registered person being a seller on account of any matter arising out of the NIC provided by a purchaser shall not be made without the prior approval of the Member IR-Operations, FBR after providing an opportunity to be heard.

Registration drive

APP adds: Meanwhile, FBR is set to launch a campaign from Oct 15 to get industrial and commercial consumers registered for income tax.

FBR Chairman Syed Shabbar Zaidi, in a tweet on Friday said that all industrial and commercial consumers must be registered for income tax purposes.

He said that the board had been using persuasive modus operandi to get that registration, for which an aggressive campaign would be launched from Oct 15.

Published in Dawn, October 5th, 2019