Above Rs50,000 purchase: Shabbar Zaidi concerned at likely withdrawal of CNIC condition

ISLAMABAD: Former Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has expressed serious concern over the possible withdrawal of the condition of computerized national identity card numbers (CNICs) on purchases above Rs. 50,000 in the coming budget (2022-23).

According to a tweet of Shabbar Zaidi here on Sunday, “reports that the new government intends to do away with the condition of CNIC on purchases above Rs. 50,000.This will be a crime against the country. I introduced it & political expediencies delayed implementation. This is the only way to document the economy & stop use of corruption money,” he maintained.

“The retailers & wholesalers resisting CNIC prescription are agents of crime. I am asking the identification of the buyer not seller. Rs 50,000 may be increased to 500,000. I assure the nation that ultimately it will be done & I will be remembered. Only thieves hide their identity,” Shabbar Zaidi added.

The government had taken a key documentation measure by imposing the condition of providing CNIC on supplies to unregistered persons through the Finance Act 2019. According to sources, the government is considering to withdraw the said condition of seeking the CNIC of the un-registered buyers in the budget (2022-23).

Last year, the former Chairman FBR submitted budget proposals including implementation of the Computerised National Identity Card (CNIC) condition with an increase in its limit from Rs50,000 to Rs100,000. Leading tax expert Shabbar Zaidi stressed the need for implementation of CNIC condition. In 2019, a provision was introduced that all purchases above Rs50,000 will be required to provide a CNIC card of the purchaser. This was very strongly resisted by traders for vested interests. The proposal lies in law but deferred through SRO.

It should be implemented at once with the limit to increase from 50,000 to a larger amount say Rs1,000,000, last year’s budget proposal of Shabbar Zaidi added.

Through the Finance (Supplementary) Act 2022, in order to facilitate general consumers, the condition of the CNIC has been withdrawn in case of payment made through debit/ credit card or digital mode.

Tough economic decisions & fragile political mandate

To broaden the tax base, the condition of CNIC was introduced in Finance Act 2019, since persons involved in the furtherance of taxable activity need to be captured through such measures. However, in order to ease compliance cost, the threshold was enhanced from Rs50,000 to Rs100,000.

The FBR has already expanded the scope of disallowance of input tax on account of non-mentioning of the Computerised National Identity Card Number (CNIC) of the buyer by the seller on the invoice required under Section 23 of the Sales Tax Act, 1990.

The condition of the CNIC from the unregistered buyers was made applicable from February 1, 2020, onwards, but not practically enforced by the FBR’s field formations in the past.

Copyright Business Recorder, 2022