A TIN is an abbreviation of Taxpayer Identification Number in Pakistan. It is a special identification number which is given by the Federal Board of Revenue (FBR) to individuals, businesses and companies registered under the taxation act. The TIN number assists the government in recognizing taxpayers and maintaining tabs of their tax payments, their tax returns and their financial affairs.
The tax system in Pakistan has developed over time, nowadays the TIN number is strictly associated with CNIC of an individual or NTN of a company although the TIN number is still widely used.
TIN Number for Individuals
Computerized National Identity Card (CNIC) number is used as the TIN in the individual taxpayers of Pakistan after an individual is registered with FBR. It implies that they do not issue a separate or an added TIN to individuals. When one is enrolling on the Iris portal of FBR, the CNIC automatically develops as the tax identification number.
The registered person is an Active Taxpayer and he or she is able to file an income tax return and receive a reduced tax rate on banking transactions, property transactions, and other financial transactions.
Businesses and Companies TIN Number
In the case of businesses, firms, and companies, the TIN number is usually called the National Tax Number (NTN). This is the number that FBR issues during the registration of the business. The CNIC can be used as the TIN by sole proprietors, whereas partnerships and companies get another NTN.
The legal operations, invoicing, opening business bank accounts, taking part in government tenders and fulfilling of the tax requirements all demand the presence of the business TIN or NTN.
Use of a TIN Number in Pakistan.
A TIN number is primarily used to achieve proper identification and documentation of the taxes. It enables FBR to monitor sources of income, payment of taxes, refunds as well as compliance status. In the absence of a TIN, a person or a business is unregistered and this may result in increased taxation deductions and legal issues.
TIN number also encourages transparency in financial transactions and makes taxpayers be part of the formal economy.
Why Is a TIN Number Important?
Many of the daily and official activities in Pakistan require a TIN number. These are the submission of income tax returns, opening and operating bank accounts and purchasing or selling property or vehicles, importation and exportation, tendering and tax refund claim. Individuals who lack a TIN are usually charged excessive withholding taxes on banking transactions, mobile usage and utility bills.
Financial credibility and adherence to tax laws in the country is also enhanced with a registered taxpayer with a TIN.
How to obtain a TIN number in Pakistan.
To receive a TIN number, persons and companies have to be registered with the FBR using the Iris online portal. People register themselves with their CNIC and businesses register themselves with their registration document. Upon registration, CNIC or NTN takes the official TIN number.
It is also free and online with minimal personal or business information requirements.
Distinction between TIN and NTN.
In Pakistan the tax identification is generally referred to as TIN, and the actual number is called NTN that is issued to businesses and non-individual entities. To the individuals, the CNIC is used as TIN and to the companies and firms, a NTN is employed as a tax identifier.
TIN number in Pakistan is one of the most important aspects of the tax system in the country. Regardless of whether you are a business owner or a personal taxpayer, having a TIN will indicate that you are a registered user with FBR and in line with the taxation laws. Not only does it allow avoiding increased taxes and fines but also allows conducting transactions related to finances and legal matters efficiently. The CNIC or NTN being the TIN as it is in the present day system has made tax registration easier and more accessible to all.
