Input tax inadmissibility should be made in stages: Industry

Karachi, July 22, 2019: Input tax inadmissibility against sales made without CNIC should be as a percentage of such sales applied in stages increasing progressively, Saud Mahmood, Chairman SITE Taxation and Trade Policy.

​In order to dampen the effect a major policy decision of submission of CNICs, SAI strongly recommends that input tax inadmissibility should be made in stages giving time for the business community to adapt to the new rules.

Instead of disallowing proportionate input tax for sales made without CNICs, the following alternate is recommended:• Input tax inadmissible to the extent of 3% of sales made without CNIC till 30^th September, 2019.• Input tax inadmissible to the extent of 5% of sales made without CNIC till 31^st December, 2019.• Input tax inadmissible to the extent of 7.5% of sales made without CNIC till 30^th June, 2020.

​By gradually disallowing input as a percentage of sales will make the transition smooth. Moreover, it will bein line with the previous system of charging further tax of 3% of sales made to non filers, which will effectively be extended till 30^th September but in an IMF compliant manner. 

​SAI believes in the documentation of the economy and that if a citizen can submit CNIC for purchasing a SIM card which is almost free then there is no reason to shy away from submitting CNIC for purchases above PKR 50,000/-. More than the requirement of CNIC, it is the sudden imposition of it that is one of the causes of the stiff resistance being faced by FBR.

A gradual and progressive implementation of the penalty on sales without CNIC will definitely make the whole process more palatable.