The government is debating whether to implement a novel plan in the budget (2023–24) to impose a ban on cash transactions in retail stores and food retail outlets/restaurants beyond a specified threshold beginning on July 1, 2023.
The feasibility of this concept and whether or not it will lead to more documentation are both being investigated by the Federal Board of Revenue (FBR).
Viability of Plan To Impose Ban on Cash Transactions
The plan, according to sources, is viable, but it is yet unclear whether it would actually be feasible in practice. These significant limitations on transactions beyond a specific threshold would encourage electronic payments.
The recommendation is that retail stores and food retail outlets/restaurants should not permit cash transactions above a particular threshold, such as Rs 10,000 and Rs 5,000.
Instead than encouraging cash payments, non-cash payment alternatives like debit/credit cards, mobile payments, or other electronic means should be promoted.
Retail establishments should be mandated to install Point of Sale (POS) devices that allow non-cash transactions for this reason. The government must also offer incentives to retailers who use electronic payment methods.
The promotion of electronic payments and limitations on currency transactions beyond a specific threshold can increase the retail industry’s openness and accountability.
It will make sure that every transaction is documented and traceable, decreasing the possibility of tax evasion and illegal acts. Additionally, it will promote financial inclusion and the usage of banking services while also offering information that may be put to use, according to sources.
To read our blog on “FBR’s new target Rs 9.2tn tax revenue in fiscal year 2023-24,” click here.
