CNICs acceptable only if payments made via banking channels
Islamabad: The Federal Board of Revenue will accept only those Computerised National Identity Card numbers of unregistered buyers where all the payments against transactions were made by the buyers through banking instruments from the bank accounts of the buyers, under section 73 of the Sales Tax Act, 1990.
It is learnt here on Thursday that the FBR will announce a new scheme ie “provision of CNIC/NTN of unregistered persons” for their documentation as wholesalers, dealers and retailers, etc.
The FBR has decided to amend Sales Tax Rules 2006 through a notification to make it mandatory for the registered manufacturers, importers and exporters to only accept CNICs of the unregistered buyers where proof of transactions made through banking channels has been submitted by the buyers.
This condition is mentioned in the new notification to be issued on the documentation of the un-registered buyers by the FBR.
Through revised Sales Tax Rules, the new scheme would be announced by the FBR to document unregistered buyers with a number of conditions to ensure genuineness and authenticity of the CNICs of the unregistered buyers.
Tax experts were of the view that denial of any legitimate input tax on mere procedural compliance is against the basic principles of law therefore provision for proportionate disallowance may not sustain the judicial scrutiny.
Likewise condition for un-registered buyers to submit proofs of banking transactions are not in line with the section 73 of Sales Tax Act 1990.
The board in its earlier clarifications excludes transactions to unregistered persons with requirement of section 73.
The provision related to clarification for non application of the condition on sales made by manufacturer through their retail outlets resolves the issue on this count.
However, even in this clause the report of such sales to separate column relating to retail sales, also apparently contains ambiguity considering the fact that in sales tax return form such separate column is only provided to those retailers who falls under special procedure for retailers paying turnover tax only.
Tax expert opined that draft notification may need further deliberation by the board on this account if not otherwise.
According to the new rules for documentation of the un-registered buyers to be issued by the FBR, the new scheme would apply to registered manufacturers, importers and exporters, making taxable, dutiable or exempt supplies to unregistered person.
All registered manufacturers, importers and exporters, making taxable, dutiable or exempt supplies to unregistered person shall issue an invoice containing the “National Tax Number” (NTN) or “Computerised National Identity Card” (CNIC) number of such unregistered persons.
This scheme shall, however, be implemented in a phased manner by the Board in five stages.
In sales tax return for the month of March, 2012 (to be filed up to 15th April, 2012), at least 60% of the sales shall be to identifiable persons whose STRN/NTN/CNIC will be provided in the sales tax return.
In the sales tax return for the month of April, 2012 (to be filed up to 15th May, 2012), at least 70% of the sales shall be to identifiable persons whose STRN/NTN/CNIC will be provided in the sales tax return.
In the sales tax return for the month of May, 2012 (to be filed up to 15th June, 2012), at least 80% of the sales shall be to identifiable persons whose STRN/NTN/CNIC will be provided in the sales tax return.
In the sales tax return for the month of June, 2012 (to be filed up to 15th July, 2012), at least 90% of the sales shall be to identifiable persons whose STRN/NTN/CNIC will be provided in the sales tax return.
In the sales tax return for the month of July, 2012 (to be filed up to August 15, 2012) and every subsequent sales tax return, 100% of the sales shall be to identifiable persons whose STRN/NTN/CNIC will be provided in the sales tax return.
Sources said that the rupee value of exports made during the month shall be included in the sales made to identifiable person for the purpose of calculation of mentioned percentages.
In case, in any month, the supplies to identifiable persons fall short of the requisite percentages, input tax adjustment of that month shall be proportionately disallowed.
In case, any registered person gives a false NTN or CNIC, which is not verified from the FBR database or NADRA database respectively, a penalty of Rs 5,000 for each wrong CNIC/NTN shall be imposed on the registered person, which shall be included in the arrears appearing in the sales tax return for the subsequent month.
The amended Sales Tax Rules said that all payments of the amount for transactions under these rules shall be made by the buyers through a banking instrument from the bank account of the buyer as envisaged in section 73 of the Sales Tax Act, 1990.
Under the new documentation regime, the manufacturers making retail sales to unregistered persons shall not be required to provide CNIC/NTN to the extent of retail sale which shall be separately shown in the sales tax return, sources said.
The registered person shall provide the buyer-wise details of each unregistered buyers in the monthly sales tax return, draft of the amended Sales Tax Rules 2006 added.
Source: Business Recorder
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