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New procedure for sales tax registration announced

ISLAMABAD (August 20 2003) : The government has made bank certificate, showing financial worth of business concern, membership of federation/chamber and income tax assessment order for the last two years mandatory for fresh sales tax registration, besides the Central Board of Revenue (CBR) teams would conduct survey of the business premises of the new applicants.

The conditions would not be applicable in case of manufacturers/companies.

The Central Board of Revenue (CBR) late Tuesday night announced new procedure for the sales tax registration making things complicated for the people who intend to get registered with the Sales Tax Department.

The CBR has also cautioned the business community through this procedure that the authenticity of applicant's identity card would be checked through verification from the National Database Registration Authority (Nadra) and declared telephone/cellular numbers would be checked from the Telecommunication Department.

Tax practitioners and sales tax experts have termed new registration procedure a practical joke, saying, how a person who started new business and applied first time for registration, could submit income tax assessment order for the last two years.

Similarly, they also contested the submission of bank certificate reflecting financial worth of business and certificate of membership of the federation/trade bodies as very harsh conditions for the new applicants.

On the condition of survey, they said that it would simply create harassment among the business community, as the taxpayers have to go through a number of stages for new registration.

The tax experts said that people intended to register would have to pay a fee in thousands of rupees to the chamber/trade bodies for getting membership certificate.

On the other hand, the CBR has justified strict registration procedure and informed the collectors of sales tax that the existing rules for sales tax registration did not provide sufficient check to curtail abuse of the system and in order to protect malpractice, the collectorate of sales tax and central excise (East), Karachi carried out an exercise to process the cases of new applicants for the sales tax registration.

After considering the outcome of the exercise, the following new procedure would be adopted for new registrations:

All individual applicants (persons other than manufacturer/companies) for new registration be asked to appear in person before the registration authority for verification of their personal identity, along with supportive documents.

The documents to be furnished with the application for sales tax registration are NIC copy of the applicant (in case of submission of form by authorised representative or any other person, a copy of his/her NIC); income tax assessment orders for the last two years; NTN Certificate; Memorandum of Articles of Association in case of a company; telephone and electricity bills vis-…-vis declared premises; proof of any letter received on the address declared in the application form; certificate of the membership of the federation of commerce and industry or any other association/trade body; bank certificate showing financial worth of business concern and attested copy of property documents/rent agreement in relation to the business premises.

Under the procedure, apart from declaration of business address, (including addresses of head office, manufacturing/business premises, branch office (s), godowns, etc) in the application form, it shall be made mandatory for the applicants to declare home address and provide detail of the property in their names.

All the applicants shall be required to submit a certificate from their banks, certifying the financial worth of the business concern.

Furthermore, the authenticity of applicant's ID Card shall be checked by getting it verified from Nadra's record.

The survey or verification of premises declared by the applicant shall be undertaken by a team comprising one deputy superintendent and one inspector.

The superintendent, Registration Division, may get counter verification done in at least 20 percent of the newly registered cases.

The telephone numbers, cell numbers declared in the application form shall be verified from the concerned department/company.

The CBR has warned the collectors that it would be the personal responsibility of the sales tax registration authority to ensure that all the columns of the application were properly filled in and duly verified/feeded in the computer by the responsible sales tax functionaries.

In case, it is found at any subsequent stage that the particulars/statements as furnished by the applicant were false/fabricated and have been wrongly verified, the assistant collector, who had issued the registration, will be held responsible.

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