FBR to allow traders 40-day time to switch to digital mode of payments

FBR to allow traders 40-day time to switch to digital mode of payments

The government has again allowed using banking cheques for payments of over Rs250,000 – local media reported Sunday night.

The government had disbanded the use of cheques just two days ago. This underscores its lack of preparedness prior to enforcing a radical change to widen the tax base.

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On Sunday, the Federal Board of Revenue (FBR) announced to roll back the two-day-old compulsory legal requirement for using a digital mode for making business-related payments of over Rs250,000.

The compulsory legal requirement has been suspended for 40 days for now, as neither the banking system nor the business community is ready to deal with this.

The FBR noted that owing to the lack of digital readiness by some corporate taxpayers, and it was considering allowing the corporate taxpayers with a grace period of 40 days to switch to the digital mode of payments effective November 1, 2021.

“FBR is thinking to allow the corporate taxpayers a period of 40 days to switch over to the digital mode of payments that will be effective from November 1, 2021, under Tax Laws (3rd Amendment) Ordinance, 2021,” as per a statement.

The digital payment requirement had been forced via a presidential ordinance instead of taking the bill to the parliament for a debate and collective decision-making.

A notification to hold the compulsory requirement is set to be issued today after legal vetting.

If the FBR had not suspended its ill-timed decision, businesses would have come to a halt due to this requirement. If the FBR had not rolled its decision back, the cheque or cash payment would have been seen as income instead of expenditure.

It merits a mention that businesses may use the traditional banking transaction mode in the intervening period, including cross-bank drafts, cross cheques, cross pay orders, or other crossed banking instruments.

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