Chairman of Taxation Committee of SITE Association of Industry (SAI), Saud Mehmood has suggested that input tax inadmissibility against sales made without CNIC be replaced with progressive increase in rate of further sales tax. He proposed new formula to end the deadlock between government and traders on the condition of production of CNIC on sales & purchase of goods by the Federal Board of Revenue (FBR).

He said that the FBR has not been able to successfully implement the CNIC condition due to the complex nature of disallowing input against sales made without CNIC which is difficult for sellers as well.

Because of the complex nature of this condition, sales tax registered sellers have made CNIC submission the only option whereas legislation allows for sales without CNIC as well.

Saud further said that in order to make implementation of CNIC submission smooth, SITE Association of Industry strongly recommends that input tax inadmissibility be replaced with progressive increase in further tax. Instead of disallowing proportionate input tax for sales made without CNICs, alternate is recommended for sales made without submission of CNIC to increase the further tax @ 5% of sales till 31st December, 2019, 7.5% of further sales till 31st March, 2020 and Further tax @ 10% of sales till 30th June, 2020.

"Progressive increase in further tax will make the transition smooth. Moreover, it will be in line with the existing system of charging further tax of 3% of sales made to non-filers," he added.

SITE Association of Industry believes in the documentation of the economy. When submission of CNIC is mandatory for availing a mobile connection then there is no reason to shy away from submitting CNIC for purchases above PKR 50,000/-.

We feel that more than the requirement of CNIC, the sudden imposition is one of the causes of the stiff resistance being faced by FBR. A gradual and progressive implementation of further sales tax on sales without CNIC will make the whole process more palatable.