The Federal Board of Revenue (FBR) on Wednesday once again deferred a major documentation measure, up to December 31, 2021, for the corporate sector to use digital mode of payments from their business bank accounts on transactions exceeding Rs. 250,000.
The FBR has issued an income tax circular for the extension in deadline stipulated under section 21(Ia) of the Income Tax Ordinance, 2001.
An amendment was made vide Tax Laws (3rd Amendment) Ordinance, 2021 whereby clause (la) was inserted in section 21 of the Income Tax Ordinance, 2001. As a consequence of this amendment, all companies, as defined under Section 80)(2)(b) of the Ordinance, are liable to use digital mode for payment to their vendors from business bank account on transactions exceeding Rs. 250,000, failing which non-digital transactions will not be accepted as a valid expense.
Last month, the FBR had extended the deadline for digital payments by the corporate sector up to November 30, 2021. Now, the FBR has extended the deadline for another month, after the previous deadline expired on November 30.
“In exercise of the powers conferred under Section 214A of the Income Tax Ordinance, 2001 (hereinafter “the Ordinance”) and taking cognizance of various representations filed by the taxpayers, the Federal Board of Revenue is pleased to extend the deadline for digital payments by Corporate Sector stipulated in Section 21(la) of the Ordinance up to December 31, 2021,” stated the circular.
Tax experts told Propakistani that the corporate sector practically cannot switch over to the digital mode of payment on short notice in the absence of any definition of “digital mode”. The FBR has to clarify the definition of the “digital mode”, as the business community is not clear what payment comes within the said purview.