Numbers on CNICs to be treated as NTNs

Federal Board of Revenue Chairman Salman Siddiq said on Wednesday that the Computerised National Identity Card Numbers (CNICs) would become National Tax Numbers (NTNs) of the existing and new taxpayers from December 31, 2011. During the first meeting of Senate Standing Committee on Finance to review Finance Bill (2011-12), the FBR Chairman said the board is taking major decisions for the documentation of economy and facilitation of the taxpayers.
From December 2011, the FBR has decided that the NTN number would be the same which has been mentioned on the CNICs. Thus, the CNICs would become the NTNs - identification number of taxpayers. He clarified that the CNICs would be considered as NTNs of those persons, who would be liable to pay tax. The number of the CNIC of a taxpayer would be his NTN for tax purposes. The already issued NTNs would be correspondently be allocated CNICs in due course of time, Salman Siddiq added.
Appreciating the FBR move towards documentation, Chairman Senate Standing Committee on Finance Ahmed Ali said that it is the right step towards documentation of the economy as all the CNICs related transactions of the taxpayers would automatically be documented after declaring the CNICs numbers as NTNs. As a result of the said decision, all the taxpayers in the potential sectors would come into the tax net, he added.
The FBR will not issue new numbers for registration of taxpayers, but CNIC would be declared as taxpayers'' registration number. However, the taxpayers would be required to provide the particulars as prescribed by the FBR for becoming a registered taxpayer. In case of company and Association of Person (AOP) the FBR will issue unique tax registration numbers, for individuals CNICs would be declared as the taxpayers'' registration numbers by obtaining all the required information from the persons desirous of seeking registration with the tax department. It is further to be clarified that at present taxpayers can make the tax payments by using the CNICs in all the bank branches.
Senate Standing Committee dropped the proposal for further decrease in the sales tax rate from 16 to 15 percent on the logic given by the FBR team of tax managers that the government has already reduced the standard rate of sales tax from 17 to 16 percent. FBR Chairman informed the committee that the government will suffer over Rs 35 billion loss due to one percent decrease in sales tax rate. The reduction in the sales tax rate from 17 to 15 percent was linked with the implementation of the Reformed General Sales Tax (RGST) Bill already pending before the Parliament.
During the committee proceedings, FBR Chairman clearly reiterated the government''s tax policy that al the Presumptive Tax Regime (PTR) and Final Tax Regime (FTR) would be brought into the normal tax regime to ensure filing of returns by all sectors. Presently, taxpayers are filing their returns under the Universal Self Assessment Scheme (USAS) and they can voluntarily declare income under the USAS. Out of total filed returns, audit of around 5 percent is being done. A large number of returns remained out of the purview of audit. There is an opportunity of misdeclaration of revenue is huge. The reversal of reform process is not possible at this crucial stage as the FBR has been engaged in documentation as well as audit of withholding agents to secure the revenue base of the country.
Additional Secretary Revenue Division Asrar Raouf endorsed the viewpoint of FBR Chairman that it is the policy of the government to end the PTR and FTR. All the final tax regimes would be brought into the normal tax regime. The FBR team of tax managers out rightly rejected a proposal of the Pakistan Vanaspati Manufacturers Association (PVMA) to change the withholding tax regime for the ghee and cooking oil industry. The PMVA demanded under the forum of the committee that the words of ''minimum'' should be excluded and they should pay full and final tax liability.
Terming the proposal as against the government tax policy, FBR Chairman said that it is practically not possible to change the government''s tax policy for just PVMA. They should continue with the existing arrangement of payment of taxes as per law. We are moving towards reforms and at this stage of time is not possible to change the government policy. However, the proposal of the association may be considered during the budget preparation exercise for the next fiscal for 2012-13.
Strongly contesting the proposal of the PVMA, Additional Secretary Revenue Division Asrar Raouf explained that the industry is already paying reduced rate of 3 percent withholding tax against 5 percent for others. This sector has to pay tax on their own profits instead of passing on burden to the consumers.
When committee was frankly discussing the possibility of legalisation of sale of liquor for enhancing revenue, a question was raised about the revenue impact. The committee asked the tax authorities to give rough estimates in case excise duty is imposed on liquor. A tax official said that the over Rs 70 billion could be collected in the form of excise duty in case of legalisation of the said item.
To a question for controlling smuggling, FBR Member Customs said that the FBR is planning to install scanners at border areas of Chaman, Torkham and Jamrud to scan the transit containers destined for Afghanistan. About the tariff rationalisation, he said that the tariff rationalisation exercise been done on the recommendations of the Engineering Development Board (EDB) and Ministry of Industries and Production. On the basis of lists provided by the EDB, tariff protection has been given to local sectors. Under customs SRO575, over 90 percent of the sector-specific machinery and equipment have been exempted from customs duty. However, only 5 percent minimum customs duty is applicable on items where protection to the local industry is necessary. Under the said SRO, 35 sectors have been extended exemption from customs duty. The exemption of customs duty is available on the import of industrial raw materials, he added.