SBP to bear fee for online tax, duty payments

Move aimed at documenting economy, will cost central bank millions

KARACHI: The State Bank of Pakistan (SBP) has announced that it will bear the cost of online payment of taxes and duties to the government in a bid to document the economy, but it will cost the central bank millions of rupees.

Besides, the central bank is encouraging banks to provide online tax payment portals to corporate clients in order to achieve a significant growth in digital payment of taxes.

"This would prove to be a game-changer in the payment system," SBP Director Finance Qadir Bakhsh said at a seminar titled "Collection of Taxes through Alternate Delivery Channels and Over the Counter" on Thursday.

"The State Bank of Pakistan will pay the fee…and it will not be deducted from customers' accounts with effect from January 1, 2020," he said.

The fee for online transactions varies from Rs10 to Rs50 each, depending on the amount of payment. The fee payment may cost the central bank millions of rupees, considering that the people made close to 1.16 million transactions to pay Rs300 billion in taxes in the past 10 months.

"This (fee payment by the SBP) will promote digital banking…and help the government document the economy," the SBP director finance said.

More importantly, there is no cap on the amount of online payment of taxes and duties as opposed to a cap of Rs1 million on digital payments from one bank to another.

"People have paid Rs310 billion in the past 10 months to date compared to Rs100 billion paid in first 10 months of the launch of the online tax payment system (in May 2018)," he said.

The collected amount comes close to around 5% of the revised revenue collection target of Rs5.23 trillion for the Federal Board of Revenue (FBR) in FY20. The original tax collection target was Rs5.55 trillion.

"This (5%) is not satisfactory collection. We have to facilitate taxpayers," SBP Executive Director Saleemullah said.

Lack of awareness among banks and taxpayers, including the corporate ones, is the only limitation hindering the success of online tax payment system. Otherwise, "this has become a tried and tested system," he said.

"We have fined around 70 bank branches for their ignorance of the online tax payment system. Earlier, we visited some 173 branches to examine whether they had trained staff and were offering such services to their clients or not," he said.

"We want the corporate clients to opt for e-payments while paying taxes and duties as this will significantly increase online payments to the FBR," Customs Collector Wajid Ali said.

He urged corporations and people to opt for the online tax payment system as there may come a time when the choice for manual tax payment would not be available. "We are aiming to launch the single window project soon, which will accept only online payments from importers, exporters and transit traders."

The FBR and the SBP introduced the online tax payment system in collaboration with 1Link one and a half year ago. However, there are banks which are unaware of the great change and development in the payment system.