KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) on Monday urged the government to immediately waive the CNIC requirement for sales to unregistered persons and three per cent Further Tax in order to revive economic activities and business transactions.
In a letter sent to PM’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh, KCCI Agha Shahab Ahmed Khan said the waiver of CNIC condition and 3pc Further Tax would result in release of major stockpiles of commodities and consumer goods into the markets and revenue collection would improve through liberalisation of transactions.
“The small and medium industry will also benefit as a result of such measures because a very large volume of raw materials is supplied to SMEs by commercial importers who are stuck with inventories. To stimulate the economy, an across the board relief is required rather than selective assistance to already favored sectors,” he added.
Khan pointed out that in the Finance Act 2019, an amendment was made to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, by addition of 10th Schedule, whereby it is mandatory to provide CNIC number of unregistered buyers in the invoice and Sales Tax Returns in addition to payment of 3pc Further Tax. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to Income Tax Ordinance and Sec.156A of Customs Act, he added.
He noted that since the number of registered persons in the sales tax regime stood hardly at around 45,000 all over Pakistan, it is not possible for suppliers/sellers and manufacturers to provide the CNIC of buyers on account of all their sales. “This condition has resulted in a slowdown of business transactions and proliferation of cash economy.”
The KCCI chief said the situation has further aggravated due to the countrywide lockdown and disruption in supply chain due to the coronavirus outbreak.
“Consequently, stocks and inventories with importers, manufacturers and wholesalers are accumulating while recoveries from markets have completely stopped and a large number of bank defaults are likely to take place due to liquidity crunch.”
Unfortunately, while giving major relief to export sectors, which hardly contributes five to six per cent to GDP, the government has entirely ignored the larger sectors of industry and trade catering to domestic markets and contributing 94pc to GDP and major part of tax revenue, Khan lamented.
“It will prove to be detrimental for revenue collection by the FBR if business transactions remain stalled while the government would surely miss the revenue targets and incur larger fiscal deficit as a result of imposition of CNIC provisions and 3pc Further Tax,” he noted.
Welcome