CNIC Condition And The Struggling Economy

CNIC Condition And The Struggling Economy

Reading Time: 2 minutes

FBR issued a general order to clarify the CNIC condition, but in fact, it created more confusion.

The condition of CNIC was introduced in the finance act 2019, which requires the registered sellers to take CNIC of their buyers and then print it on the invoices.

And, for a fake id, the seller is exempted if he did his job in “good faith.”

FBR Explanation

Some sellers reported problems when they received duplicate or fake Buyers ids. So, FBR issued a clarification regarding the meaning of good faith and when they won’t hold the seller responsible.

According to the sales tax general order 106/19, FBR will exempt the seller from liability if:

1. The tax invoice complies with the requirements of section 23(b) of the Sales Tax Act of 1990.

23(b) requires the seller to print the name and address of the buyer on the invoice.

2. The transaction amount is deposited in the seller’s declared bank account.

No explanation of whether the seller will be responsible for a cash transaction if he doesn’t deposit it in the bank account.

3. The CNIC provided by the purchaser is found authenticated by the NADRA.

It means the seller has to make sure at the time of the transaction that CNIC is valid, which puts additional responsibility on the seller.

4. The seller will not provide CNIC/NTN of his employees or associates.

Only this condition is valid. The seller shouldn’t provide the CNIC by himself just to complete the transaction.

The general order also mentions that member-IR Operations will issue a show-cause notice to the seller after an opportunity of being heard.

Extra Burden On Seller

If you follow closely, these conditions indirectly hold the seller responsible in case of fake CNIC.

In other words, the seller is guilty of providing a fake CNIC of his purchaser unless he proves otherwise.

The whole drama indicates that FBR did no proper homework before imposing the CNIC condition, which has created all the mess.

The CNIC requirement is a prime dispute between FBR and traders, and both are unwilling to back off from this requirement.

As for the traders, they claim that buyers are unwilling to identify themselves and prefer not to purchase instead.

On the flip side, the IMF imposed the CNIC condition, and hence it’s difficult for the government to take it back.

Meanwhile, this condition is hurting the economy as it has decreased the cash flow in the market.

Solution

FBR should temporarily suspend the condition and let things move forward. Once the economy gets rolling, then to enforce it gradually.

Alternatively, FBR should come with a better idea as a lack of tax culture has made it difficult for the business community to follow such rules.

The traders never want to pay their due taxes, so you have to tame them carefully.

Summary

Leave a Comment