NA approves use of CNIC for filing income tax returns

KARACHI: The National Assembly has approved the use of Computerised National Identity Card (CNIC) in place of National Tax Number (NTN) for filing income tax returns by individuals.
However, tax experts said that without bringing necessary changes into the statute the implementation is difficult.
According to the Finance Act, 2015, a new sub-section has been added to Section 181 of the Income Tax Ordinance, 2001, stating: “From Tax Year 2015 and onwards, in case of individuals having CNIC issued by the National Database and Registration Authority (Nadra), CNIC shall be used as the National Tax Number.”
The tax experts said that there are other sections in the ordinance, which required amendments to implement the usage of CNIC properly.
According to Section 114 of the ordinance, every person who obtained National Tax Number (NTN) is required to file income tax return.
Some tax analysts said that defining this section means every CNIC holder will require filing income tax return for the tax year 2015 and onwards.
In Pakistan over 100 million people have obtained CNIC, which simply means that the Federal Board of Revenue (FBR) should expect over 100 million returns for the year against around 875,000 returns filed last year.
Furthermore, the Section 118 of the ordinance states that a return will be treated invalid if filed without NTN Registration.
Tax experts said without amending this provision the returns filed on CNIC may be declared as invalid.
The use of CNIC is introduced in the Budget 2015/16 for facilitating the individuals in filing income tax return who have taxable income or required by the law to file return.
The NTN is still mandatory for foreign individuals, association of persons and companies for tax matters.
Masood Naqvi, senior partner at KPMG Taseer Hadi and Chairman of the Tax Reform Commission, said that the intention to introduce the CNIC was to facilitate the individual taxpayers.
He said there is a requirement of filing income tax return by certain persons, including owner of motor vehicles, immovable property or piece of a land.
These persons were facing difficulties in obtaining tax number and cumbersome procedure also opened doors for corruption.
He; however, said that there were technical issues in the implementation for which the authorities would issue regulations.
Munawwar Hasan Shaikh, president of the Pakistan Tax Bar Association, said that the implementation of CNIC for filing income tax returns is not possible without making certain changes in the laws.