Section 194 of the Income Tax Ordinance, 2001, updated up to June 30, 2021, now explicitly prescribes prosecution for the improper use of the National Tax Number (NTN) Certificate.
Individuals knowingly or recklessly using a false NTN Certificate, including that of another person, on a return or other prescribed documents, will now face penalties that include fines not exceeding fifty thousand rupees, imprisonment for a term not exceeding two years, or both.
The Finance Act, 2021, brought about several amendments to the Income Tax Ordinance, 2001, with Section 194 emerging as a crucial provision to curb fraudulent practices related to NTN Certificates. The revised text of Section 194 reads: “Prosecution for improper use of National Tax Number Certificate .— A person who knowingly or recklessly uses a false National Tax Number Certificate, including the National Tax Number Certificate of another person, on a return or other document prescribed or used for the purposes of this Ordinance shall commit an offence punishable with a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both.”
This amendment is a direct response to concerns regarding the misuse of NTN Certificates, which play a pivotal role in the tax administration system. The NTN is a unique identifier assigned to individuals and businesses for tax-related transactions, and its misuse undermines the integrity of the tax system.
The penalties outlined in Section 194 reflect the severity with which the FBR views the improper use of NTN Certificates. The fines, imprisonment terms, or a combination of both are designed to act as a powerful deterrent, discouraging individuals from engaging in fraudulent activities related to NTN Certificates.
This move aligns with global best practices in tax administration, where the misuse of identification numbers is considered a serious offense. It recognizes the importance of preserving the accuracy and reliability of tax-related documentation, ensuring that individuals and businesses cannot exploit loopholes for personal gain.
Industry experts have welcomed this proactive approach, noting that it addresses a potential vulnerability in the tax system. The misuse of NTN Certificates can lead to various forms of tax fraud, including false reporting and identity theft, and this amendment aims to prevent such activities by imposing substantial penalties.
The amendment to Section 194 of the Income Tax Ordinance, 2001, strengthening penalties for the improper use of NTN Certificates, underscores the commitment of the FBR to safeguard the integrity of the tax system. This change is anticipated to act as a significant deterrent against fraudulent practices related to NTN Certificates, contributing to a more robust and trustworthy tax administration system in Pakistan.