Requirement for individuals over 18 years to register with CGIR not valid

I refer to the notification attributed to the CGIR, which went viral on social media, for the mandatory requirement of registration of all individuals over the age of 18 years for the income tax with effect from 1 January 2024, under Section 102 of the Inland Revenue Act, No. 24 of 2017 (the Act).

As per the notification, all individuals who are over 18 years are required to register with the Inland Revenue Department (IRD) and to obtain the Taxpayer Identification Number (TIN) with effect from 01.01.2024. In the event of failure by such individuals, forced registration would be done by IRD, and a penalty not exceeding Rs. 50,000 would be imposed.

I am of the well-considered opinion that neither the CGIR nor the Minister of Finance is legally empowered under Section 102 of the Act to mandate all the individuals above 18 years to register themselves with IRD and to obtain a TIN certificate.

Let us see relevant sections 102(1) of the Act and other sections concerned.

Section 102 (1) of the Act: “Every person liable to furnish a return of income for a year of assessment … shall register with the Commissioner-General …

Hence, this section 102(1) imposes the mandatory requirement of registration with IRD on any person who is liable to furnish a return of income.

Section 126(1) of the Act states who should furnish the return of income. “Every person chargeable with income tax under this Act shall furnish … a tax return”

Accordingly, it is very clear that any person who has an annual net income of more than Rs. 1,200,000 is liable to furnish the return of income.

Accordingly, Section 102 mandates a person who has the tax liability to register with IRD and obtain a TIN. However, requiring any individual, based on their age and not their income, to obtain a TIN or to register with IRD is not only illogical but ultra vires the Act as well.

The Gazette Extraordinary No. 2334/21 dated 31.05.2023 issued by the Minister of Finance purportedly under Section 102(3) of the Act, does not empower the Minister to mandate any individual – as stated under PART-B of the Gazette, whose age is above 18 years – to register with IRD.

Section 102(3) of the Act reads as follows:

“The Minister, with the consent of the Commissioner General, may specify additional classes of persons required to register under this section.”

The section gives the Minister discretionary power to specify additional classes of persons required to register with IRD, such as the classes of persons he mentioned in PART-A of the said Gazette. 

However, what he specified in PART-B of the Gazette is not the class of persons required to register but the entire population based on age, not income.

According to the said notification of the CGIR, all individuals above 18 years –including Samurdhi recipients, Ping Padi recipients, and even beggars—are required to register with the IRD and obtain TIN, of which failure would result in the imposition of a penalty not exceeding Rs. 50,000.

The requirement of any individual for whom the CGIR is of the opinion that his or her annual net income is more than Rs. 1.2 million to register with the IRD and to obtain a TIN is tenable and logical.

However, requiring any individual based on their age, irrespective of their income, to register with IRD and threatening, for failure, to impose a penalty of not exceeding Rs. 50,000 is ultra vires the provisions of the Act, untenable, illogical, and impractical. It is to be noted that the Persons’ Registration Department is responsible for the registration of a person based on age, and the Inland Revenue Department is responsible for the registration of a person based on the size of their income.

(The writer is a retired Deputy Commissioner General (DCG) of IRD. He can be contacted via [email protected].)