CNIC/NTN condition to be implemented in phased manner: SRO likely next week

The condition for manufacturers, importers and exporters to give the Computerised National Identity Cards (CNICs) numbers or National Tax Numbers (NTNs) of unregistered buyers under SRO 821(I)/2011 would now be implemented in a phased manner through a Statuary Regulatory Order (SRO) likely to be issued next week.
Sources told Business Recorder here on Friday that the Federal Board of Revenue (FBR) will issue a notification next week to implement the most crucial documentation measure of obtaining CNICs or NTNs of unregistered buyers under the SRO 821(I)/2011 in a phased manner.
Sources stated that the FBR will not defer the implementation of the SRO 821(I)/2011 for six months, but implement this documentation measure in a phased manner. Another important feature of the SRO would be that it would be implemented prospectively. The input tax adjustment would only be allowed proportionately as per monthly slabs to be notified by the FBR for compliance by the business and trade. The SRO would notify the documentation measure in phases.
As per implementation stages of the SRO, the registered persons would be required to provide the CNIC or NTN of a certain percentage of buyers, which will be increased every month. Under the new arrangement agreed between the FBR and trade, in the first phase 60 percent compliance has to be shown by all sales tax registered persons ie manufacturers, importers and exporters by providing identification in the form of NTN or CNIC of buyers under the SRO 821.
In the second phase, the percentage would be gradually increased to 70 percent and this percentage would be increased systemically until 100 percent compliance has been achieved by the registered persons under the SRO 821. Under the proposed scheme, the compliance level would start from 60 percent which would be increased to 70 percent, 80 percent, 90 percent and 100 percent on monthly basis.
It has also been decided that the FBR will only allow input tax adjustment proportionally as per slabs to be notified by the Board. The registered persons would be bound to submit specified minimum percentage of sales made to the identified taxpayers. For example, if the manufacturers, importers and exporters have to show compliance up to 60 percent under SRO 821 and the compliance of 55 percent has been witnessed, the input tax adjustment of only 55 percent would be allowed and proportionate adjustment of 5 percent would be disallowed. If the registered persons have to show compliance of 70 percent, but actual compliance is 65 percent, input tax adjustment of 5 percent would be disallowed. Thus, input tax adjustment would only be allowed proportionately as per slabs to be notified by the Board.
The registered person would have to submit CNIC or NTN of their un-registered buyers up to a certain percentage. The percentage could be increased on monthly basis till achievement of 100 percent by the end of currant fiscal. Hence, it would ensure that 100 percent implementation of the phased-programme within this financial year. The phase-wise implementation of the SRO-821 would also facilitate the registered manufacturers, importers and exporters to gradually ensure documentation of their buyers within the supply chain.