Saturday, 25 March 2023

Why Digital Mode of Payments have issues to implement in corporate sector?

Taxpayers are again requesting to Federal Board of Revenue (FBR) that the mandatory condition of digital modes of payment for companies (corporate sector) be allowed simultaneously with other conventional means of payments for at least one year period.

The relevant Ordinance was promulgated on September 15, 2021, which will stand repealed in 120 days i.e. on January 13, 2022, keeping in view Article 89(2)(a) unless the same is passed by the National Assembly by January 13, 2022.

National Assembly may through a resolution extend the Ordinance for a further period of 120 days and it shall stand repealed at the expiration of the extended period, or if before the expiration of that period a resolution disapproving it is passed by the Assembly, upon the passing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.

Issues in implementation of digital mode of payments in corporate sector

It is normal business practice that in lieu of delivery of goods, the buyer releases 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.

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 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.

The State bank of Pakistan launching a new payment system called ‘Rast’
READ ALSO: The State bank of Pakistan launching a new payment system called ‘Raast’

According to State Bank of Pakistan, digital payment includes 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.

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.

Digital means of payment” for companies as envisaged under section 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 can smoothly run till they implement as a transitional phase. However, many companies have already started steps to move towards digital / online payment system.

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