FBR urged to restrict buying from registered suppliers

ISLAMABAD: The Federal Board of Revenue (FBR) was urged on Saturday to restrict retailers to make purchases only from sales tax registered individuals instead of binding manufacturers for their sale only to registered suppliers and retailers.

Friends of Economic and Business Reforms (FEBR) said the condition of computerised national identity card (CNIC) on retailers is adding tensions for registered manufacturers, leading to huge drop in their sale, grinding business activities to a halt.

FEBR President Kashif Anwar, in a letter to FBR Chairman Shabbar Zaidi, said supplies shown by sales tax registered entities in their sales tax returns should be automatically shown as purchases are shown in the annual business income tax returns of those who are only registered in income tax.

“This will complete the supply chain from sales tax registered suppliers to the income tax registered purchasers,” Anwar said.

A law has made it mandatory for every sales tax registered entity – either manufacturer, importer, dealer, distributor, wholesaler or retailer – to mention sales tax registration number, national tax number or CNIC on sales tax invoice above Rs50,000 value to feed domestic sales invoices (annex-C) of sales tax return, which automatically verifies the particulars of buyers and compiles their record internally. If one does not provide NTN or CNIC, the proportionate input sales tax is disallowed to registered individual. All the purchases – local or imported – of sales tax registered individuals are updated automatically to avail the benefit of input tax in their sales tax returns and no purchase entry can be manual.

“The FEBR is not against documentation rather it propagates for the benefits of becoming filer,” Anwar said. “But, in order to avail full sales tax input against purchases in sales tax returns, the condition of CNIC is creating problems for sales tax registered suppliers, and it goes without saying that all the legal formalities are for those who are in the tax net and who are more documented.” He said the condition of mentioning sales tax registration number, national tax number or CNIC to avail full amount of input tax is for sales tax registered suppliers.