The Central Board of Revenue (CBR) has completed the largest data cleansing of National Tax Numbers (NTN) for allocation in future of single taxpayer identification number to the business community.
CBR Member Information Management System Aamir Zafar told Business Recorder on Wednesday that the Board has successfully achieved the objective of cleansing the NTN 'Master Index'. The latest position of NTN Master Index shows that 2.2 million NTNs have been verified and declared genuine. However, he dispelled the impression that the NTN Master Index had 2.7 million NTN holders.
During the exercise, the Board had issued 0.6 million letters to the taxpayers whose NTNs were not verified or addresses did not match with the NTN Master Index. The Board verified NTNs/addresses in cases where taxpayers responded to the letters. However, if a taxpayer was not ready to verify NTN data, the Master Index had to be cleansed.
Total 16,000 leading taxpayers, who are also importers, are operating under NTN Master Index. The CBR has given the data to the customs department, and all their business transactions are being handled under the verified NTN Master Index.
He said that one of the reform objectives is to achieve a single taxpayer identifier for business transactions pertaining to sales tax, customs and income tax. As a policy it was decided to work on NTN database and remove its deficiencies and once that is achieved, it would gradually replace all other identifiers including Sales Tax Registration Number (STRN).
The NTN database, in the past, consisted of around one million records. This data was plagued with problems like obsolescence, duplication and fake NICs. Over the period, 0.6 million non-verifiable records had been made inactive; 1.2 million about new NTNs have been added to bring total number of records of verified NTNs to 2.2 million. The CBR has took a number of measures during the whole exercise, which would help in allocation of single identifier to taxpayers.
The Board has verified all NIC/CNIC from Nadra, and all corporate registration numbers have been verified from SECP. Therefore, non-verified data (NIC/CNIC/Company registration number) have been removed from active NTN database. No new sales tax registration numbers are issued unless an NTN is provided. New NTNs are consistently being allocated to income tax returns of last three years filled with verifiable CNIC/ NTN and 80 percent STRN have been matched with NTN. Non-matched STRN will be de-registered by the end of 2006.
The application for filing of NTN issuance over the internet has been developed and will be launched in January, 2007 and all new software applications are designed to work on a single identifier eg Pakistan Customs Computerised System.
Aamir said that many corporate entities, including banks/financial institutions, who had acquired NTN through unscrupulous means, or touts, have been taken by surprise about not finding their fake NTN in the 'NTN cleansing Master Index'. Some large corporations have been carrying out business transactions on fake NTN.
The NTNs of these big companies have been declared fake, as the Securities and Exchange Commission of Pakistan (SECP) was unable to verify these companies' registration numbers. Based on SECP data, the CBR has erased their NTN from the Master Index.
One of the possibilities is that banks might have submitted wrong NTNs on their income tax returns or given wrong registration numbers. There are chances that certain banks have not specified the 'Business Code' on their returns. The return is traced on the basis of 'Business Code', which is necessary for checking the NTN in the Master Index. During the cleansing exercise, the system was unable to verify the NTNs and might be erased from the NTN Master Index.
When asked how an institution like bank can acquire fake NTN, he quoted several instances where big exporters and financial institutions had assigned their lower staff to obtain NTN from the concerned centre. The staff was misguided by touts outside the NTN Centres and delivered fake tax numbers on payment of thousands of rupees. The CBR has already decided to issue NTNs to the fresh applicants free of charge. CBR Member IMS said that now no person can operate under a fake NTN due to cleansing of the NTN Master Index.