EDITORIAL: An expert committee on cashless economy, with representatives from the public and private sector, proposed enforcing the use of RAAST QR code, by empowering district administrations to accept digital payments at all retail outlets.
RAAST created in 2021 is fully owned by the State Bank of Pakistan (SBP) and offers instant, reliable and digital payment services to the public with the objective of promoting the adoption of digital financial services — an objective that would bring greater numbers into the formal economy.
QR codes are used to display text to the user, open a webpage on the user’s device, add a vCard contact to the user’s device (an electronic business card) to open a Uniform Resource Identifier (a string of characters that uniquely identifies an abstract or physical resource like a website, an email or a book) to connect to a wireless network (which requires wider availability of Wi-Fi than exists in Pakistan today).
After the launch of RAAST bulk payments, SBP introduced person-to person fund transfers and settlement services with bank customers able to send and receive payments using the bank’s mobile services, internet banking or over the counter services.
However, use of RAAST would necessitate having a bank account and one would hope that the rather stringent rules for opening an account are relaxed. The proposal envisages RAAST QR codes be mandatorily installed at all government payment points within six months to create digital wallets for all government disbursements.
The beneficiaries of Benazir Income Support Programme (BISP) access their Kafalat quarterly payments through cash cards provided by partner banks. However, there are a significant number of beneficiaries unable to directly withdraw their disbursements due to inability (attributed to illiteracy) to use cards which, in turn, accounts for their engaging others at a fee which, no doubt, prompted the committee to suggest that these payments should be made digitally.
One would hope that RAAST QR codes would make the beneficiary easily purchase items on the market though it may take more than the envisaged six months to a year for very small retail outlets especially those in the rural areas to use RAAST QR code.
The committee pointed out that merchants charge 1.5 percent on credit cards and one percent on RAAST and with the informal economy estimated at 35 percent, the committee proposed that sales tax must be reduced on digital payments from 18 percent to 5 percent along with a three-year tax audit break for digital transactions.
The committee wisely suggested that the government must favour incentives to punishment as the latter has not worked. Be that as it may, the audit break would apply to the upper income earners of the populace while the hundreds of thousands of Pakistanis who operate under the radar and do not have bank accounts may not be able to benefit from this feature of the proposal.
The committee also acknowledged that SIM blocking will reduce access to RAAST (in practice for non-filing of income tax returns, issues of expired and/or stolen NICs) and urged the government to make the 4 percent withholding tax adjustable rather than a minimum tax; and remove 10 percent advance tax on filers with non-filers liable to pay 75 percent as it raises costs and capital expenses. And finally, the withholding tax under Section 236 was raised from 10 to 15 percent in the 2021 supplementary finance act which applies to tax filers, the industry points out, though the bulk of telecom clients are non-filers.
To conclude, one can support the proposals; however, one would hope that allied reforms pre-date the committee suggestions, including ease of opening bank accounts, and reforming the tax structure by reducing the existing heavy reliance on indirect taxes, which are passed onto consumers, to direct taxes based on the ability to pay principle as well as taking account of the genuine needs of all productive sectors.
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.