- Tax experts are expecting another extension upto December 31 for the corporate sector for switching over to the digital mode of payment due to practical issues
ISLAMABAD: Tax experts have urged upon the Federal Board of Revenue (FBR) to allow corporate sector digital mode of payment simultaneously with other conventional modes of payments for one year.
When contacted, Asif S Kasbati (ICAP Fiscal Laws Committee Member and Pakistan Business Council Core Tax Committee Member) highlighted several issues in implementation of digital mode.
Tax experts are expecting another extension upto December 31 for the corporate sector for switching over to the digital mode of payment due to practical issues.
He was of the view that the mandatory condition of “digital means of payment” for companies as envisaged u/s 21(la), be allowed to run simultaneously with other conventional modes of payments as per section 21(l) for at least one year, so that their business is not affected and can smoothly run till they implement as a transitional phase.
He highlighted that the digital payment encompasses online transfer, crossed cheque, debit and credit card.
However, the FBR has yet to define the digital mode. The FBR also needs to ensure that all suppliers/service providers, including growers of various agricultural crops such as sugar cane, rice, cotton, wheat and other commodities accept the digital mode of payment.
This is especially important in the case where supplier is an individual or an association of person (AoP).
The FBR has to ensure that no additional compliance burden will be placed on taxpayers to cross-verify digital payments and the FBR itself has to satisfy that the matching facility will be properly available through the banking system/bank statement.
It is normal business practice that in lieu of delivery of goods, the buyer tenders its payment by way of post-dated cheques in advance, which is normally accepted by the other party and is inherently a secure way of making the payment.
Moreover, the port terminal charges, wharfage charges, charges for clearance of delivery orders etc, are paid in advance through crossed cheques or pay-orders.
He stressed that the digital mode is going to hamper the business activities, as it does not cater to the situation and solution of such transactions.
Kasbati further added that digital mode is also impractical and is likely to affect the business transactions in the cases where petty cash payments, which in aggregate exceed millions of rupees (owing to large scale corporate business) under various account heads.
Various banks have fixed their own limitation on the quantity of making digital/online payments in a day and have also fixed the threshold of the amount; and banks do not allow to exceed the threshold limit fixed by them.
Kasbati added that unless the said matters are discussed with the stakeholders, this move is likely to create lots of trouble for the corporate sector and hamper corporatisation.
Copyright Business Recorder, 2021