Retailers registered with the Federal Board of Revenue (FBR) have begun obtaining details of computerized national identity cards (CNICs) from consumers who buy goods worth more than Rs 100,000, tax officials said.
Limit of CNIC requirement increased to Rs 100,000
Retailers with Sales Tax Registration Number (STR) were providing details of ordinary consumers on sale of goods worth more than Rs 100,000 through monthly sales tax returns. Through the Finance Act 2020, the limit already increased from Rs. 50,000 to Rs. 100,000.
READ ALSO: FBR issues procedure for cash back refunds of sales tax to customers of Tier-1 retailers.
Sources said that a significant amendment introduced in the Sales Tax Act 1990 through the Finance Act, 2019, which made it mandatory for registered retailers to collect consumer information. The FBR defines the ordinary consumer as a person who buys goods for his own use and not for the purpose of resale or processing. Retailers must collect information about retailers, including names, addresses and CNICs. This condition of CNIC or NTN was to come into force from 01 August 2019. However, the business community had demanded an extension of the NTN’s requirement, as well as an extension of the CNIC requirement.
CNIC or NTN no on sales tax invoice
The FBR has gradually clarified the implementation of CNIC through Circular No. 01 of July 26, 2019 as per Section 23 of the Sales Tax Act 1990 relating to issuance of invoices, and it has clarified that unregistered persons In case of purchase, their CNIC or NTN number will be stated in the invoice. The warnings, provided in it, as follows: In case of supply provided by a retailer, CNIC or NTN not required where the transaction value including sales tax amount does not exceed fifty thousand and The sales made to the ordinary consumer to purchase goods for his own use, not for resale or processing purposes. If it proved later that the if CNIC provided by the buyer proved incorrect, in case of sale in good faith, the seller will not liable for tax or penalty.
READ ALSO: FBR issued list of Tier-1 integrated retailers with FBR
Sales Tax Registration No of supplier on sales tax invoice
The FBR has issued an explanation in this regard through Sales Tax Circular No. 02 of 2019 stating that it observed that in many cases this observed receiving sales tax on invoices / receipts without identification of sales tax no on Invoices / receipts issued to customers. Sometimes, the National Tax Number (NTN) of supplier indicated on the invoice, to show that the supplier is registered.
Consumers have to request invoices / receipts with sales tax number on invoices / receipts on purchase of goods and services. Supplier can collect sales tax only when the supplier already registered for the purpose of sales tax, and reflects the sales tax no on the receipt / receipt issued to the customer. “In other cases, the provider not entitled to collect sales tax from consumers. The FBR further clarified that in case of purchase from a person who not registered with sales tax, the buyer is not required to provide his NIC.
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