Monday, 28 November 2022

Deadline for Digital Mode of Payments Proposed to further extend

Federal Board of Revenue (FBR) is examining a proposal to further extend time period beyond November 1, 2021 for the corporate sector to shift over to the digital mode of payments.

FBR can extend the grace period, which would expire on October 31. If the proposal is finalized, the FBR chairman would take the final decision in this regard.

The FBR had allowed the corporate taxpayers a grace period of 40 days to switch over to the digital mode of payments with effect from November 1, 2021 under Tax Laws (3rd Amendment) Ordinance, 2021.

Tax experts, representatives of chambers and corporate sector told Business Recorder that the FBR has to clarify the definition of the “digital mode”.

Business community is not clear that what payment comes within the purview of “digital mode”.

The corporate sector is not ready to switch over to the digital mode of payments from November 1, 2021 in the absence of definition of the “digital mode”.

Auditor General and other provincial authorities are not digital. The government departments cannot pay digitally. The federal and provincial governments as payers are defined as companies under the Income Tax Ordinance, 2001.

Recently, Senate Standing Committee on Finance has out rightly rejected mandatory condition of the corporate sector to make payments through digital payment mode.

The Pakistan Advertising Association (PAA) and the Pakistan Business Council (PBC) have already raised serious issues in the practical implementation of digital mode of payment, which would dismantle existing business practice of using valid banking instrument i.e. post-dated cheques.

It is strongly demanded that a definition of the term “digital means” needs to be provided by the FBR to avoid any issues.

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