ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday set a new deadline for the business sector to switch to digital payments, extending the date to January 31.
In this regard, the tax service issued a circular which states: “TTaking note of the various declarations filed by taxpayers, the FBR is pleased to extend until January 31, 2022 the deadline for digital payment by the business sector provided for in article 21 (1a) of the ordinance.
The last deadline for doing so expired on December 31, 2021.
It is relevant to mention here that the tax service extended the date twice before while IIn October, the industry asked the government to grant a one-time extension of at least six months, saying they were not ready for the new regime.
It is relevant to mention here that the RBF has introduced significant changes in the Tax Laws (3rd Amendment) Ordinance, 2021, with the aim of documenting the economy, seizing supply chains and expanding the ‘tax base.
The new ordinance restricted the scope of payments through traditional banking channels due to spending exceeding 250,000 rupees for taxpayers other than businesses. As a result, a new clause now requires businesses to make digital payments on expenses exceeding 250,000 rupees. However, expenses for utility bills, transportation, travel, and payment of taxes and fines would continue to be eligible whether paid in cash or through traditional banking instruments.
Gray transactions are very common in business value chains, according to the tax department, as nearly 99% of all business transactions are done in cash.
In addition, third-party payments are very common in the organized and informal sector where companies do not use their own bank accounts to make payment for supplies and require their clients and informal transaction-based investors to carry out payments. direct payments to the main supplier.
This is very prevalent in supply chains and has become an accepted standard.
Despite many attempts to increase the documentation of supply chains such as WHT and other taxes, the number of unregistered distributors and retailers remains high, suppressing sales and avoiding income tax altogether.