A large number of computerised national identity card (CNICs) numbers of poorer people are widely being misused by car dealers to obtain the National Tax Numbers (NTNs) for purchasing luxurious vehicles, bringing actual income and investment of car dealers within the documented regime by tax department.
It is learnt that the Federal Board of Revenue (FBR) has received a report on the on-going massive misuse of the CNICs of the poor masses from Regional Tax Office (RTO) Gujranwala which brought investment made by dealers in purchase of cars of over 1000 cc. If similar cases are framed by the Broadening the Tax Base (BDB) Units in big cities of Karachi, Lahore, Faisalabad, Rawalpindi, Islamabad, etc, the FBR will be able to bring a large number of undocumented transactions within the formal economy, which would broaden the tax base as well as raise revenue.
Details showed that the tax authorities in Gujranwala obtained data of booking and delivery of new cars of over 1000 cc from car manufacturers in the jurisdiction of the said district. After compilation of computerised data of only one car manufacturer, the department issued notices to all these persons who had purchased new vehicles on the basis of NTNs allocated to them. When such notices were received by the concerned NTN holders, it was found that most of them were not aware that their CNICs had been used for allocation of NTNs. Most of them were poor people, and others were relatives of the car dealers. These poor people had approached the RTO Gujranwala and informed that their CNICs had been misused for allocation of vehicles and they are not aware of any kind of transaction for the purchase of new cars. Some persons are earning monthly income of Rs 5,000-Rs 6,000 and vehicles have been booked in their names.
Promptly acting on the computerised data and reaction of poor people, the regional tax authorities traced the concerned car dealer, who used the CNICs of poor people to book vehicles. The car dealer not only agreed to include Rs 35,000 profit per car as income but also showed readiness to disclose the source of investment. The concerned car dealer of a leading manufacturer further assured the tax department that he would also give record of the past three years to the RTO to prove genuine investment in the business. The car dealer further said that the investment has not been made from the black money but actual investment has been made which has been included in the income for the tax year 2010. The car dealer is also ready to give access to his books of accounts under income tax laws.
In the next phase of documentation exercise, the data of other car manufacturers would also be examined and notices would be issued to the NTN holders, who have purchased luxurious vehicles. Tax authorities are expecting similar kinds of results in other cases of car manufacturers within the Gujranwala district. According to sources, the investors and brokers involved in the buying and selling of new cars would also be brought into the documented regime with the help of the BDB Units headed by the concerned Chief Commissioner. Similarly, the data of other car manufacturers is also being scrutinised to bring such kind of transactions into the tax net.
The astonishing part of the story is that if a small RTO of Gujranwala has been able to bring a car dealer involved in monthly selling of hundreds of vehicles into the tax net, the actual potential of such cases across the country is enormous. Interestingly, the 'computerised tracker system' at the district has successfully managed to bring the actual investment and source of income behind such booking and purchase of cars. The scrutiny of car dealers' data at big cities would also bring a large amount of investment into the documented regime. The investors and brokers in car business would also be brought into the documented regime through verification of data from the car manufacturers and their dealers. The FBR is also persuading the BDB Units in all major cities to detect similar cases to improve compliance and bring undocumented persons into the tax net, sources added.