The Federal Board of Revenue (FBR) has decided to maintain a central treasury of sales tax, income tax, customs duty and federal excise duty (FED) for electronic payment and refund system (EPRAS) to directly deposit the refunds payment into the taxpayer's bank account.
Sources told Business Recorder here on Friday that the EPRAS is expected to be launched next month. The FBR will implement the system in co-ordination with the banks, but the central treasury would be maintained by the FBR. Recently, FBR Secretary Directorate of Research and Statistics (DRS) made a detailed presentation on EPRAS followed by its demonstration before the board-in-council.
The system was discussed and it was decided that the ownership of the system shall rest with the DRS which shall maintain a central treasury of all four taxes administered by the FBR. The operation and maintenance of the system shall rest with the Pakistan Revenue Automation Limited (PRAL), board-in-council added.
The establishment of a Tax Clearing House (TCH) is under process to directly deposit the refunds payment into the taxpayer's bank account. The TCH would interlink FBR with commercial banks and State Bank of Bank (SBP) to exchange data for electronic payment of taxes and transfer of refund directly to the taxpayer's account in any major commercial banks.
Sources said that biggest advantage of the system will be the usage of cash in business transactions by the taxpayer till the last moment. He can schedule the payment in advance directing the system to debit the amount from his bank account on the payment date. Likewise, upon implementation of e-Refunds module the taxpayer will receive the refund amount directly in his bank account and save the cheque issuance/clearing time.
The advantage of the EPRAS is the maximum availability of cash for taxpayer till the last moment due to abolition of the manual tax payment and refund systems. Under electronic system, taxpayer can deposit payment at anytime.
The EPRAS project is aimed at providing e-payment and e-refund facility to the taxpayers having bank account in any commercial bank of Pakistan. Under this system, the paper cheque will be replaced with Electronic Payment Advice (EPA) and Electronic Refund Advice (ERA). In the first phase, the e-Payment module is being implemented and after successful implementation the e-Refunds module will be implemented.
Each commercial bank will maintain a Clearing Account, which will be credited upon successful processing of each EPA issued by the taxpayer. The commercial banks will only perform the function of electronic funds transfer from taxpayer account to the clearing account and at the end of day the commercial banks will settle the cash with SBP by using the RTGS (Real Time Gross Settlement System). The Computerised Payment Receipt (CPR) will be issued by the SBP. Both taxpayer as well as government will benefit from the EPARS system. However, the commercial banks will not act as agents of SBP for collection of taxes under the EPRAS.
Under the EPRAS, the government will have the advantage of real time reporting and the same day cash settlement. The system is conceived in such a way that after successful implementation in FBR, it can be extended to, other government departments.
Sources said that all commercial banks will settle cash through RTGS, on the same day before closing on EPRAS/TCH. The Centralised Reporting & Reconciliation will be performed in Islamabad, where headquarters of Ministry of Finance, Controller General of Accounts (CGA), AGPR and the FBR are located. The SBP will look into the technical modalities for reporting and reconciliation. Fifth, bank charges, if any, will be finalised by SBP, FBR and banks. The taxpayers making domestic tax payments will be allowed two more days beyond the last date (except the dates ie, the last working day of the month).
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