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ISLAMABAD: Taxpayers, Friday, again requested the Federal Board of Revenue (FBR) that the mandatory condition of digital means of payment for companies be allowed simultaneously with other conventional modes of payments for one year period. Asif Kasbati, PBC Core Tax Committee Member, ICAP Fiscal Laws Committee Member told Business Recorder that there are several issues in implementation of digital mode, due to, which further extension is expected up to January 2022 as the relevant Ordinance was promulgated on September 15, 2021, which will stand repealed in 120 days i.e. on January 13, 2022, keeping in view Article 89(2)(a) unless the same is passed by the National Assembly by January 13, 2022.

He opined that the National Assembly may through a resolution extend the Ordinance for a further period of 120 days and it shall stand repealed at the expiration of the extended period, or if before the expiration of that period a resolution disapproving it is passed by the Assembly, upon the passing of that resolution: Provided further that extension for further period may be made only once.

It is worthwhile to note that the Senate has already rejected the digital mode matter. Kasbati added that the FBR has to ensure that no additional compliance burden will be placed on taxpayers to cross-verify digital payments and the FBR has to 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 secured 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.

Kasbati viewed that Digital Mode is going to hamper the business activities, as it does not cater the situation and solution of such transactions. The 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 different 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 exceeding the threshold limit fixed by them. The definition of the term “Digital Means” has not been provided so far by the FBR in order to avoid ambiguity and interpretational issues.

If we treat the same as transfer online from buyer/acquirer business account to supplier/service provider business account as Digital Means, the one password system currently applicable would not suffice; and there would be a need of sub-passwords system, owing to several cities’ business and different transaction authorities for the respective city; department officials of the company.

As per the SBP views, digital payment encompasses online transfer, crossed cheque, debit; credit card. However, the FBR has yet to define the same in order to avoid different interpretation by different corporate taxpayers. The FBR 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 Individuals and Association of Persons. The tax expert, Kasbati, strongly believes that unless the above and other matters are discussed with the stakeholders, this move is likely to create lots of trouble for the corporate sector and hamper corporatization.

He is 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 even one year even if passed by the Parliament, so that their business is not affected and can smoothly run till they implement as a transitional phase. Few companies have started steps to move towards digital/online payment, Kasbati indicated.

Copyright Business Recorder, 2021

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