ISLAMABAD, February 20, 2024 – The Federal Board of Revenue (FBR) has issued a clarification stating that female consumers can present the CNIC of their husband or father when making purchases above Rs50,000.
The announcement comes as part of the FBR’s effort to streamline the taxation system and incorporate CNIC details into transactions, aligning with national demands for tax compliance.
The FBR clarified that this requirement specifically applies to purchases made from sales tax-registered entities. Currently, there are approximately 41,484 registered persons paying taxes under the Sales Tax Act, 1990. The provision does not obligate the buyer to be a registered person under the sales tax law, allowing sales to unregistered individuals.
Key points of the clarification include:
1. Applicability to Business Transactions: The amendment applies to business-to-business transactions and select transactions with end consumers involving amounts exceeding Rs50,000. However, this condition only applies when purchasing from sales tax-registered entities.
2. Exemption for Ordinary Consumers: The provision exempts ordinary consumers, defined as those making purchases for personal, non-business use. For these consumers, the CNIC requirement does not apply if the purchase value is below Rs50,000.
3. Safeguarding Businesses: To safeguard businesses operating in good faith, the law ensures that no liability or penalty will arise against the seller if it is subsequently proved that the CNIC provided by the purchaser was incorrect. This provision aims to prevent harassment and unnecessary hurdles in legitimate business transactions.
4. Approval Process for Action: The FBR emphasizes that no action will be taken against the seller without the approval of the Chief Commissioner of the jurisdiction. For incidents exceeding Rs5 million, further approval from designated authorities, such as Member Operations or Director General Export Oriented Sector, will be required.
5. No Action without Addressing Non-Genuine CNIC Use: The FBR explicitly stated that no action will be taken against the seller unless concurrent action has been initiated against the person who used the non-genuine CNIC.
The FBR’s clarification seeks to address concerns and misconceptions surrounding the CNIC requirement for sales tax transactions. By providing exemptions for ordinary consumers and ensuring safeguards for businesses acting in good faith, the FBR aims to strike a balance between enforcing tax compliance and facilitating smooth business operations. The clarification emphasizes the FBR’s commitment to automating processes and expediting the release of refunds, especially for export-oriented sectors transitioning from zero-rated status.
