The Federal Board of Revenue (FBR) is contemplating the withdrawal of the condition mandating the provision of Computerized National Identity Card (CNIC) details for transactions conducted through digital means, as proposed in the Finance (Supplementary) Bill, 2021.
The bill suggests waiving the CNIC and National Tax Number (NTN) requirement for payments made through debit cards, credit cards, or other digital modes.
The existing sales tax law mandates that registered individuals furnish the CNIC or NTN of unregistered buyers when making sales, with the exception of transactions by retailers where the transaction value does not exceed Rs 100,000. The proposed amendment in the Finance (Supplementary) Bill aims to eliminate the need for providing CNIC details in cases where payment is executed through digital channels, such as debit or credit cards.
PwC A. F. Ferguson & Co., in their memorandum on the bill, highlighted the current sales tax law requirement and emphasized that the proposed change is particularly relevant when dealing with transactions involving unregistered buyers. The waiver of the CNIC condition for digital payments seeks to streamline and modernize the tax collection process, aligning it with the growing trend of digital transactions in the country.
Under the existing provision, if the CNIC provided by the buyer is found to be incorrect, the seller is absolved of tax liability or penalties in cases of good-faith transactions. The proposed amendment seeks to withdraw this provision, potentially leading to increased scrutiny and legal challenges for sellers. Sellers may face unwarranted actions if the CNIC provided by the buyer is inaccurate, and verifying CNIC details can be a challenging task for sellers in practice.
The consideration to withdraw the CNIC condition for digital payments reflects a broader effort to encourage the use of electronic payment methods, reduce the administrative burden on businesses, and facilitate smoother and more efficient transactions. By aligning tax regulations with the digital era, the FBR aims to create an environment that promotes financial inclusivity and technological advancements in the economic landscape.
However, concerns have been raised about the potential consequences of removing the provision that currently protects sellers from tax liability or penalties in cases of incorrect CNIC information provided by the buyer. The risk of unwarranted actions against sellers and potential litigation is a key consideration as the FBR evaluates the impact of the proposed change.
As the Finance (Supplementary) Bill progresses through the legislative process, stakeholders and industry experts are closely monitoring developments and providing feedback on the proposed amendments. The outcome will likely have implications for businesses, particularly those engaged in digital transactions, and may shape the future landscape of tax regulations in Pakistan.