Manual VAT registration may end next year

The National Board of Revenue is likely to terminate the manually-issued 11-digit VAT registration from next year as it moves forward with automating the revenue system to bring transparency, reduce hassles and increase compliance.

The revenue authority mulls over asking firms to re-register for the electronically generated 9-digit Business Identification Number (e-BIN) within December this year, said officials yesterday.

“We have sought opinions from field offices in this regard,” said a senior official of the NBR seeking anonymity.

The NBR introduced the 9-digit e-BIN, as prescribed by the new VAT law, on March 23 as part of its digitisation plans.

The new VAT law was supposed to take effect from this year. But confusion arose among businesses about whether e-BIN could be used after the government postponed its plan to enforce the new law by two years.

Just after the passage of budget for fiscal 2017-18, the NBR's VAT Online Project announced on June 29 that businesses would be able to use both the BINs for export and import activities and participate in tenders until further decision. As of yesterday no new decision has come up.

Some senior officials at the field level favour the manually issued 11-digit BINs on the grounds that e-BINs are not compatible with the geography-based VAT collection system.

The officials said the 11-digit BINs were mainly issued against the branches of firms whereas the 9-digit e-BINs were not.

Instead of branch-wise registration, a firm has got a single registration in line with the new law.

A senior official of VAT Online Project, however, said branch-wise VAT registration can be done after some modifications in the software.

Officials working on the matter said a public notice will be issued soon in this regard after getting feedback from field offices, clearing ambiguity among businesses.

In the draft public notice sent to field offices for opinion, the NBR said it plans to keep the 11-digit BINs valid until December 31, 2017. By this time, it will ask firms to re-register.

Until July 12, a total of 15,402 businesses have registered for fresh e-BINs, while 25,679 have re-registered since the launch of the automated system for VAT registration.

The NBR has given 8.5 lakh VAT registrations since it introduced the VAT system in 1991. Of the firms that got manually issued 11-digit BINs, 32,000 submit returns. 

Many firms and businesses that had got BINs earlier do not exist anymore, while many, owing to the manual system, evade submitting returns, officials said.

The introduction of the online system will bring about transparency in registration and reduce the hassles of taxpayers, they added.