Plan to amend ST Act: provision of unregistered persons' CNICs/NTNs to be made mandatory

The tax advisors/consultants of the Federal Board of Revenue (FBR) have drafted a sales tax registration plan (2011-12) under which amendments have been proposed in the Sales Tax Act 1990 to make it mandatory for all registered persons, excluding retailers and exporters, to furnish the computerised national identity card numbers (CNICs)/National Tax Numbers (NTN) of all unregistered person to whom sales have been made.
Sources told Business Recorder here on Friday that the FBR has hired some tax advisors and consultants to assist the tax authorities in increasing the number of sales tax registered persons. The tax advisors have submitted a detailed plan for increasing sales tax registrations in 2011-12. Keeping in view highest level of non-compliance by the sales tax registered persons, the tax advisors of the FBR have submitted a comprehensive plan to the FBR Chairman Salman Siddique for improving sales tax registration in 2011-12.
According to the report of the tax advisors/consultants of the FBR on sales tax documentation, the origin of most of the economic activities is in commercial imports, manufactured goods, business of wholesalers/distributors, etc. All commercial importers and manufacturers/wholesalers/distributors above the sales tax registration threshold are registered under the Sales Tax Act, 1990 and are obliged to furnish the details of sales in relevant Annexure of the monthly sales tax returns. However, most of these sales tax registered persons reflect bulk of their sales made to unregistered persons grouped as a single transaction. In order to keep an eye on the flow of economic activities originating from these sources, it is imperative that such entities furnish the detail of their sales including those made to un-registered person.
Accordingly, it has been recommended that suitable amendment be made in the Sales Tax Act, 1990 whereby all registered persons (excluding retailers and exporters) are obliged to furnish the CNIC/NTN of each person, not registered under the Sales Tax Act, 1990, to whom sales have been made.
This will also curb the under-invoicing by the importers as well as manufacturers, and the data generated from this source can be used not only for broadening the tax base but also for the purposes of audit of taxpayers. Once this is enforced, the under-reporting of sales by the subsequent buyers will also be taken care of.
To effectively tackle the situation of purchases made by entities registered under the Sales Tax Act, 1990, sources said, the purchases from unregistered persons under the Sale Tax Act, 1990 are either not reported in the Sales Tax Return and, if reported, are grouped as a single transaction.
Accordingly, tax advisors/consultants of the FBR have recommended that suitable amendment be made in the Sales Tax Act, 1990 whereby all registered person are obliged to furnish the CNIC/NTN of each person, not registered under the Sales Tax Act, 1990, from whom purchases have been made. The data generated from this source can be used not only for broadening the tax base but also for the audit of taxpayers. Once this is enforced, the under-reporting of sales by sellers of goods will also be taken care of, sources added.