ISLAMABAD: The documented steel sector has approached Finance Minister Shaukat Tarin to increase the grace period of 40 days to six months for the corporate taxpayers to switch over to the digital mode of payments under Tax Laws (3rd Amendment) Ordinance, 2021.
In a letter addressed to the finance minister, Pakistan Association of Large Steel Producers said that the grace period is too short and the minimum compliance time should be extended to six months, without any further extension in time.
In this regard, the Pakistan Association of Large Steel Producers would like to draw your kind attention towards a recent amendment made vide Tax Laws (3rd Amendment) Ordinance, 2021 [the New Ordinance] whereby clause (la) has been inserted in Section 21 of the Income Tax Ordinance, 2001 [the Ordinance].
The industry believed that the current digital infrastructure available in Pakistan in terms of hardware and software need more time, better and efficient resources such as better technology, human resource, and adaptability from the transactional originators and user-friendly environment regime at both ends, to translate the fruition of digital economies for all stakeholders.
At the moment all companies, as defined under Section 80(2)(b) of the Ordinance, are liable to use digital mode for payment to their vendors from business bank account on transactions exceeding Rs250,000 failing which non-digital transactions will not be entertained as valid expense.
In this respect, a grace period of 40 days has been allowed by the FBR for switching to digital mode of payment up to 31st October 2021. However, the grace period is too short and the minimum compliance time should be extended to six months, without any further extension in time.
Currently Pakistan economy and local industry is facing severe economic crisis nationally as well as on the international front.
The government is taking appropriate measures to stabilise the economic conditions, and is developing basic infrastructure on digital mode, but the timelines mentioned, October 31, 2021, is not feasible to roll out the digital model immediately.
The industry recommended that keeping in view future challenges and technological advancements where world economies are moving "Cryptocurrencies" regime and cytological models in block chain technology, we need to create mass awareness campaigns, create enabling environments, level playing field across the board and then set time lines for these "Digital Change Management" measures in line with Digital economies.
In the light of above, the imminent enforcement of digital mode may not be able to provide desirable results.
Also, there are chances that this may adversely impact on the already struggling industry. We therefore request you to kindly take notice of this issue and devise a course of action for both the government and the industry for step by step conversation of your vision into reality, it added.
Copyright Business Recorder, 2021