The Pakistan Association of Large Steel Producers (PALSP), has requested Finance Minister Shaukat Tarin to increase the grace period for the switch over to the digital mode of payments under Tax Laws (3rd Amendment) Ordinance, 2021 from 40 days to six months for the corporate taxpayers.
The PALSP in their letter to the FM, drawing attention to a recent amendment made vide Tax Laws (3rd Amendment) Ordinance, 2021 [the New Ordinance] whereby clause (la) has been inserted in Section 21 of the Income Tax Ordinance, 2001 [the Ordinance]; have urged that the grace period and the minimum compliance time should be extended to six months, without any further extension in time.
The industry believed that the current digital infrastructure available in Pakistan in terms of hardware and software needed more time, better and efficient resources at both ends, to translate the fruition of digital economies for all stakeholders. At the moment 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 Rs250,000 failing which non-digital transactions will not be entertained as valid expense.
Currently Pakistan economy and local industry is facing severe economic crisis nationally as well as on the international front. Although the government is taking appropriate measures to stabilise the economic conditions, and is developing basic infrastructure on digital mode, but the timelines mentioned, October 31, 2021, is not feasible to roll out the digital model immediately in view of industry participants.
The industry recommended that keeping in view future challenges and technological advancements where world economies are moving “Cryptocurrencies” regime and cytological models in block chain technology, we need to create mass awareness campaigns, create enabling environments, level playing field across the board and then set time lines for these “Digital Change Management” measures in line with Digital economies.
In the letter, PALSP member urged relevant authorities that in light of the above mentioned reasons, the imminent enforcement of digital mode may not be able to provide desirable results. Also, there are chances that this may adversely impact on the already struggling industry. We therefore request you to kindly take notice of this issue and devise a course of action for both the government and the industry for step by step conversation of your vision into reality.