Unfazed FBR makes digital mode of payments mandatory


ISLAMABAD: The Federal Board of Revenue (FBR) Tuesday did not extend the grace period beyond November 30, 2021 for applicability of the “digital mode of payment” by the corporate sector.

Despite serious resistance from the corporate sector to switch to digital mode of payment, the Federal Board of Revenue (FBR) has enforced from December 1, 2021 the ‘impracticable’ and ‘harsh measure’ of making digital payments mandatory for businesses and corporate organisations.

Earlier, the board had extended the deadline for digital payments by the corporate sector up to November 30, 2021.

Till filing of this story, the FBR has not notified any extension.

However, the FBR can issue an Income Tax Circular on Wednesday (Dec 1) for further extension from the same day.

The business community and the corporate sector was anxiously waiting for another extension for digital payments by the corporate sector beyond December 31st, 2021; however, no Income Tax Circular was issued by the FBR on the extension in deadline stipulated under section 21(Ia) of the Income Tax Ordinance, 2001.

The business community has repeatedly asked the FBR to allow conventional modes of payments along with the mandatory condition of “digital mode of payment” for companies for at least a year. It is apprehended that the security of post-dated cheques, used as a means to ensure payments due against sales on credit, would not be available after switching over to the digital mode of payments.

The FBR had allowed the corporate taxpayers a grace period to switch over to the digital mode of payments w.e.f. December 1, 2021 under the Tax Laws (3rd Amendment) Ordinance, 2021.

Keeping in view practical difficulties of the corporate sector, the FBR has the authority to extend the grace period, which expired on November 30th.

The business community has also strongly recommended to the FBR to immediately defer policy of switching over to the digital mode of payments for four months, as it is not possible for the business community to adopt it from December 1, 2021.

Tax experts said that the condition was remarkably in contradiction with other modes of payment through banking channels, which was historically remained in practice and was widely accepted under the provisions of the Income Tax Ordinance, 2001.

The law of “digital mode of payment” was surely going to hamper the business activities as it did not cater to the situation and solution of such transactions and added that presently, the businesses, including but not limited to Port Terminal Operators and Shipping Lines, were unaware and were not ready for this “digital mode of payment”.

They said that the “digital mode of payment” was likely to affect the business transactions in the cases where petty cash payments, in aggregate exceed millions of rupees, which cannot be made digitally.