The Finance Bill 2022 has introduced several positive measures, such as progressive taxation, poverty alleviation tax, and deemed income tax on immovable property, among others. However, it also has some negative aspects, including the removal of the condition of including CNIC or NTN in the sales tax invoice.
Under the Finance Act 2019, it was mandatory for all individuals providing goods or services to include their NTN/CNIC in the sales tax invoice. Later, this condition was only applicable for invoices worth Rs. 50,000 or more. However, this condition has now been revoked, and sales tax invoices can be issued without including CNIC/NTN.
This change has significant implications for the documentation of economic activity in Pakistan. The efforts to encourage people to register and document their economic activity are now being undermined by this new provision. The input tax claim from sales to unregistered taxpayers is no longer possible, and this will have a pro rata effect on businesses.
Furthermore, the Finance Act 2021 had a positive change in which public limited companies were excluded from the limit of claiming input tax up to 90%. However, the Finance Bill 2022 has reversed this change, which could have significant economic implications for the state.
In addition, the Finance Bill 2022 proposes a new penalty for defaced sales tax invoices. This penalty is yet to be fully defined, but it is likely to have a negative impact on businesses that fail to comply with this new provision.
In conclusion, while the Finance Bill 2022 has several positive measures, the removal of the CNIC/NTN condition for sales tax invoices is a negative aspect that could have significant implications for the documentation of economic activity in Pakistan. The reversal of the positive change for public limited companies and the proposed penalty for defaced sales tax invoices are also concerns that need to be addressed. It is important to consider the broader economic benefits of these provisions and ensure that they do not hinder the growth and development of businesses in Pakistan.