ISLAMABAD: Retailers registered with Federal Board of Revenue (FBR) have started obtaining detail of Computerized National Identity Card (CNIC) of consumers, who buy goods above Rs100,000, tax officials said.
The sources said that retailers having sales tax registration number (STRN) were providing details of ordinary consumers on sale of goods above Rs100,000 through their monthly sales tax return.
The threshold amount was increased from Rs50,000 to Rs100,000 through Finance Act, 2020.
The sources said that through Finance Act, 2019 an important amendment was inserted to Sales Tax Act, 1990 under which it was made mandatory for registered retailers to collect information of ordinance consumers.
The FBR explains ordinary consumer as a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing.
The retailers are required to collection information of retailers including name, address and CNIC etc.
This condition of CNIC or NTN was to apply from August 01, 2019. However, business community had demanded to extend the application of the condition of NTN besides it was also demanded to increase the threshold for requirement of CNIC.
The FBR explained the implementation of the CNIC through Circular No. 01 of 2019 dated July 26, 2019 that Section 23 of the Sales Tax Act, 1990, relating to issuance of invoices and particulars to be specified therein, has been amended to provide that in case of supplies to un-registered persons, their NIC or NTN number shall be specified in invoice.
The caveats, provided therein, are as under: NIC or NTN shall not be required in case of supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand and the sale is being made to an ordinary consumer buying goods for his own consumption and not for the purpose of resale or processing;
If it is subsequently proved that NIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.
The FBR through Sales Tax Circular No. 02 of 2019 issued clarification in this regard stating that it had been observed in many cases, suppliers of goods and services are charging sales tax on invoices/receipts without identifying their sales tax registration number (STRN) on the invoice/receipts issued to the customers. At times, National Tax Number (NTN) is indicated on invoices, to exhibit that the suppliers is registered.
Customers are suggested to ask for invoices/receipts having sales tax number on the invoice/receipts on purchase of goods and services. Sales tax can only be recovered from the customer if the supplier is registered for sales tax purpose, and reflects the STRN on the invoice/receipt issued to the customer.
“In other cases, the supplier is not entitled to recover sales tax from the customers. Customers should beware of the same.”
Explaining the purpose of the clarification, the FBR said that may suppliers were charging sales tax from customers without getting them registered under the sales tax regime.
This practice is against the law and is liable to penal action. This practice leads to increase in prices and undue enrichment of sellers without any deposit of tax with the government. Customers are suggested to seek invoice/receipts from suppliers with STRN on the invoices/receipts issued, if sales tax is charged on their purchases.
The FBR further clarified that buyer is not required to provide his NIC in case of purchases from a person not registered for sales tax.
