Advance tax sections 236-G and 236-H: FBR may waive off CNIC condition

The Federal Board of Revenue is examining a proposal to waive off the condition of submitting computerised national identity card (CNICs) numbers on payment of advance tax on sales to distributors, dealers, wholesalers and retailers under sections 236-G and 236-H of the Income Tax Ordinance, 2001. Sources told Business Recorder here on Thursday that the taxation measure under 236-G and 236-H requires CNIC or other particulars for deposit of tax payment.
The section 236-G is related to the advance tax on sales made to distributors, dealers and wholesalers and section 236-H deals with the advance tax on sales to retailers. Recently, business community has explained the FBR that as it is simply not possible for them to collect particulars of their buyers therefore this exercise had remained non practicable in the past.
Business and trade suggested that people are ready to pay tax hence if a provision of free tax number be provided, they will discharge their tax liability without going into the requirement of CNIC and NTN or otherwise government would not able to even collect tax on this account.
The FBR is of the view that the idea was basically introduced two years back through notification 821(i)/2011 and 191(I)/2011 than amendment was brought in through section 153-A of the Income Tax Ordinance 2001. The whole idea behind the scheme was to build up a database of unregistered persons and then use this information for broadening of tax base. The increasing number of taxpayers would eventually reduce the tax burden of existing persons and hence the traders should extend their assistance for the achievement of this objective.
Sources said that the business and trade is not against the broadening of tax base but practically it's not possible for them to secure required information from their customers. The unregistered segment of the society is far bigger than registered segment hence the registered segment cannot dictate their terms. The penalty of 1 percent further tax along with 5 percent extra tax on utility bills of unregistered person were introduced and supported by trade with the ideology to make the unregistered person uncompetitive so that they will be forced into the tax net. It is neither practicable nor justifiable that at one end extra penalty of tax be collected from unregistered person and at the other end they would be required to provide their detail of particulars, they added.
Keeping in view the observations of the business community, the FBR is reviewing proposal to take away the condition of submitting CNICs on payment of advance tax on sales to distributors, dealers and wholesalers under sections 236-G and 236-H of the Income Tax Ordinance 2001.