Commercial power consumers may be required to obtain NTNs

The Federal Board of Revenue is likely to propose to the Ministry of Finance to make it mandatory for the commercial consumers of electricity to obtain National Tax Numbers (NTNs) for carrying out their business activities in budget (2012-13).
Sources told Business Recorder here on Monday that the FBR is reviewing the budget proposal to make it compulsory for the commercial consumers of electricity to show their computerised national identity card numbers (CNICs) or NTNs to operate as commercial entity. In last budget, the FBR had floated this budget proposal, but the same was not accepted by the policy markers. This year, the FBR is expected to once again propose the government to take this documentation measure for expanding the tax base. In case the government approves the proposal, it could be termed as one of the key documentation measures for 2012-13.
At present, it is not mandatory for the commercial consumers of electricity to obtain NTNs from the tax department. Even if the commercial consumers of electricity would submit the CNICs to the tax department, it would be enough for the FBR for allocation of the NTNs on the basis of the CNICs. When CNICs is necessary for opening of the bank accounts or obtaining credit cards etc, the same condition should apply on the commercial consumers of electricity.
When asked about the disconnection of electricity of commercial consumers without NTN, sources said that it would be a harsh penalty to disconnect electricity merely on the basis of not obtaining NTN. Moreover, the FBR has no formal agreements with the power distribution companies to disconnect the electricity connections of commercial units having no NTN.
The government has made it mandatory for the holders of commercial and industrial connection of electricity, where the amount of annual bill exceed rupees one million, to file income tax returns in last budget. Through Finance Act 2011, the Board had amended section 114 of the Ordinance 2001 to ensure filing of returns by commercial and industrial connection of electricity, where the amount of annual bill exceeds Rs 1 million. The industrial/commercial consumers have to pay a reduced rate of withholding tax on monthly electricity bill under section 235 and as provided in Division-IV of Part-IV of First Schedule to the Income Tax Ordinance 2001.