The Federal Board of Revenue has issued a notification declaring that a Computer National Identity Card (CNIC) is mandatory for citizens who make a purchase worth over Rs.50,000 from a registered sales tax seller.
A female buyer can also use the CNIC of her husband or father to make the said transaction. The law provisions notified by the board maintain that the condition will not apply if the purchases are valued below Rs. 50,000 and the sales are being made to an ordinary customer.
The main purpose of making CNIC mandatory is to document business-to-business transactions and those valuing higher than Rs. 50,000; in order to identify a limited number of customers. The CNIC condition will help avoid fictitious and unverifiable business buyers, preventing huge sales tax losses in the value chain.
The FBR has issued a clarification via a sales tax circular to detail the amendments made in the Sales Tax Act. These amendments have rendered it mandatory for buyers to show CNIC on transactions made with a sales tax registered person. Around 41,484 sales tax registered persons pay tax with returns.
According to the amendment, if the purchase involves a sales tax registered person, the CNIC number of the buyer will be necessary for some specific situations. Moreover, the provision of CNIC does not mean that the buyer should be a registered person under the sales tax law. Sales can be made to the unregistered persons.
The board also clarified that the seller will not bear the liability of loss or penalty if the sale has been made in good faith to a purchaser who provided the incorrect CNIC. Moreover, no action will be taken against the seller if there is an error identified later, given the transaction was made in good faith.
If an FBR team takes any action, it will need the approval of the chief commissioner of the jurisdiction. If transaction(s) exceed Rs. 5 million, the action will be taken only after the member of operation or a director general approves it.